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Travel stocks rally as EU set to welcome vaccinated American tourists this summer

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Watch: Europe soon open to vaccinated Americans

Travel stocks received a boost on Monday amid reports that the European Union (EU) is poised to allow US tourists to visit this summer if they have been fully vaccinated against COVID-19.

Ursula von der Leyen, president of the European Commission, told the New York Times that the bloc would switch policy, under certain conditions, after more than a year of mostly banning non-essential travel from most countries.

It has not been confirmed when tourist travel is set to open up, however, authorities in the EU and the US are in advanced talks over how to make vaccine certificates acceptable as proof of immunity for visitors.

“The Americans, as far as I can see, use European Medicines Agency-approved vaccines,” von der Leyen in an interview on Sunday. “This will enable free movement and travel to the European Union.”

She added: “Because one thing is clear: All 27 member states will accept, unconditionally, all those who are vaccinated with vaccines that are approved by EMA.”

The coronavirus vaccine rollout programme in the US has been highly successful, and it is on track to inoculate 70% of adults by mid-June.

READ MORE: European stock markets slip as UK set for fastest growth since second world war

The European drugs regulator has approved all three vaccines currently being used in America, those being the Moderna (MRNA), Pfizer (PFE) and Johnson & Johnson (JNJ) jabs.

European travel stocks and airlines were lifted on the back of the news.

British Airways owner IAG (IAG.L) and aircraft engineer Rolls Royce (RR.L) climbed more than 3% in London, while Ryanair (RYA.L) and EasyJet (EZJ.L) also rose.

Germany’s Lufthansa (LHA.DE) similarly rallied 3% and Air France (AF.PA) was also in the green.

British Airways owner IAG rose on Monday on the back of the news. Chart: Yahoo Finance
British Airways owner IAG rose on Monday on the back of the news. Chart: Yahoo Finance

“Travel stocks are rallying on the news, with investors hoping that the development could be the thin end of the wedge in terms of a return to some kind of normality,” Richard Hunter, head of markets at Interactive Investors, said.

“Even so, larger questions remain as to the willingness of individuals to holiday in view of the current restrictions and whether the proliferation of video conferencing during the pandemic will deal a harmful blow to business travel in general.

“This in turn would affect not only the airlines, but the likes of Rolls-Royce which receives a large portion of income based on hours flown by the airlines for which it provides engines.”

The move, however, will still depend on the health situation across Europe, which is currently dealing with a third wave of COVID infections. Also individual member states may reserve the right to keep stricter limits such as quarantine restrictions.

Unlike the US vaccine programme, and Britain which has given 33.6 million people a first dose of the coronavirus vaccine, the rollout has been much slower in Europe.

People wearing face masks walk at Trocadero square near the Eiffel Tower, as France began a gradual end to a nationwide lockdown due to the coronavirus disease (COVID-19) in Paris, France, May 16, 2020. REUTERS/Gonzalo Fuentes     TPX IMAGES OF THE DAY
It has not been confirmed when tourist travel is set to open up, however, authorities in the EU and the US are in advanced talks over how to make vaccine certificates acceptable as proof of immunity for visitors. Photo: REUTERS/Gonzalo Fuentes

Officials in Brussels told the NYT that it is possible that a low-tech solution would be used in the near future to enable people to travel freely on the basis of vaccination.

A traveler to Europe, for example, could get an EU vaccine-certificate equivalent on arrival after showing a bona fide certificate issued by his or her own government.

It comes as up to 30 countries could be on the UK’s "green" list for summer holidays from May 17, according to government and industry sources.

Grant Shapps, UK’s transport secretary, said last week that the government’s new traffic light ratings of countries would treat a nation’s islands independently of any higher COVID rate or lower vaccination rate on the mainland.

READ MORE: Travel industry slams 'hammer blow' UK holiday proposals as Jet2 suspends flights

This means that destinations including Spain’s Canary Islands, Portugal’s Azores, Madeira, Malta and the Balearic Islands could be cleared for travel.

Greece is also running a campaign to vaccinate all the population of at least 85 of its islands, which would put Zakynthos and Santinori in the frame for early summer holidays.

Britain’s traffic light system currently assesses countries as “green,” “amber” or “red” based on vaccination rates, infection levels, prevalence of variants of concern and capacity to genome sequence the virus.

Holidaymakers will be able to travel to “green” destinations without having to quarantine on their return, however they will have to pay for a PCR COVID test even if they are already vaccinated.

“Amber” ratings, which are expected to cover most of mainland Europe, will require travellers to quarantine at home for 10 days on their return with two PCR tests on days two and eight.

Russ Mould of AJ Bell said: “Reports that the EU is considering permission for vaccinated American travellers to come to the continent is fostering further optimism, even as India struggles with another wave of COVID and one which is persuading some star overseas cricketers who are playing in the Indian Premier League to get home as quickly as they can before India goes on their home countries’ list of banned, or restricted, destinations.”

Watch: Should I book a holiday in 2021?

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