Nearly £2bn was added to the value of UK airlines and tourism companies on Wednesday after ministers decided that vaccinated travellers from the US and EU will no longer have to quarantine upon arrival in England.
British Airways, easyJet and jet engine maker Rolls-Royce were among the biggest beneficiaries, enjoying strong stock market gains on hopes that the cloud over the travel sector may finally be lifting.
Heathrow and Virgin Atlantic, which aren’t listed on the stock market, also stand to gain from increased visitor numbers, while the economy can expect a fillip after missing out on £22bn in tourist spending last year.
Shai Weiss, chief executive of Virgin Atlantic, welcomed the reopening of the lucrative transatlantic corridor but called on the US and UK governments to go further.
“The UK is already falling behind the US and EU and a continued overly cautious approach towards international travel will further impact economic recovery and the 500,000 UK jobs that are at stake,” he said.
He called on Boris Johnson to move the US to the UK’s “green list” of countries subject to no travel restrictions and urged the White House to lift a ban on UK travellers, imposed over fears about the Delta variant of Covid-19.
According to figures from Visit Britain, tourism from the US and Europe accounted for nearly half of tourists’ annual £28.4bn spend in the UK before the pandemic.
Overall spending slumped to £6.2bn last year, a decline of more than £22bn.
The trade body Airlines UK has previously estimated that the loss of transatlantic aviation alone cost the UK economy £11bn in 2020 and forecast that delaying the reopening of air routes until September would cost £26bn in 2021.
“This is still nowhere near the summer season passengers were hoping for, and we remain the only sector that is not allowed to trade on a pre-pandemic basis,” said a spokesperson for the group.
“But today is a positive step that should pave the way for a return to unrestricted travel in the future.”
Tom Thackray, director of infrastructure at the UK’s leading business lobby group, the CBI, said reopening international air travel was a “vital piece of the recovery jigsaw”, while Heathrow boss John Holland-Kaye said easing restrictions would “generate billions in new tourist income”.
Rolls-Royce (up 4.55%), British Airways owner IAG (3.89%), along with hoteliers IHG (1.44%) and Premier Inn owner Whitbread (1.75%) were among the best-performing 20 stocks on the FTSE 100, while Dublin-listed Ryanair was up 2.36%.
On the FTSE 250 the top riser was airport and travel food company SSP (7.28%), with Wizz Air (6.16%) and easyJet (5.06%) not far behind.
Factoring in gains for tour operator Tui, listed firms exposed to inbound UK tourism had climbed in value by more than £1.9bn by close of trading.
The collapse in global air travel during the pandemic has hit UK firms hard.
At Heathrow, visitor numbers dropped from between 5 million and 7.7 million a month in 2019 to as low as 206,505 in April 2020 and remained far below normal in June 2021 at just 956,689.
Airlines such as British Airways and easyJet suffered heavy losses and were propped up with state support, while Sir Richard Branson secured a £1.2bn rescue package to keep Virgin Atlantic afloat.
Aviation analyst John Strickland, of JLS Consulting, highlighted the importance of reopening transatlantic routes in particular.
“The US is such an important market for Virgin and BA. Virgin is more dependent but for BA it’s one of their most important sources of revenue.
“There has been little long-haul passenger capacity since this crisis started, so a semblance of some return is very very important indeed. It doesn’t mean we’re out of the woods, as UK travellers can’t go to the US yet, but it’s an important step in the right direction.”
The US is Britain’s single largest and most valuable inbound visitor market, according to Visit Britain, worth £4.2bn to the UK economy in 2019.
There were 4.5 million inbound visits from the US to the UK in 2019, 11% of the total from anywhere in the world. American tourists each typically spend £973 when they visit, 25% higher than the average from all nations.
But as a bloc, the EU is even more important. In 2019 the UK welcomed 24.8 million travellers from the European Union, 61% of that year’s total. Visitors from the EU spent a record £10.7bn in the UK in 2019, up 10% on 2018, making up 37% of all inbound visitor spending.
British Airways chief executive and chairman, Sean Doyle, said more countries should to be moved to the green list and also urged the government to “review the current expensive testing requirements that are out of step with our neighbours”.
