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Is the Travel Industry Headed for a New Crisis Due to the War in Ukraine?

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The travel industry is one of the areas that was hit hard during the COVID-19 pandemic. This year was promising for its recovery, but things are about to change with the ongoing war in Ukraine. For instance, airlines are closing again, and UK citizens are advised against traveling to Russia, Ukraine, Moldova, and Belarus. Those in Ukraine are also advised to leave the country for safety purposes.

In addition, Russia’s Civil Aviation Authority has announced the close off of its airspace. The good news is that these flight cancellations and route diversions are temporary and will only last for a short duration. However, the UK travel industry will still be affected long-term through the following ways.

Low Fuel Supply

The war in Ukraine has resulted in a low supply of crude oil. This has also increased the commodity’s price, which has surged to more than £110 per barrel. In the long run, traveling to and from the UK will be expensive due to potentially longer air routes and fuel price hikes. With high fuel prices also come low demand, which will only spell bad news for the travel industry, especially for companies that are still struggling to recover from the COVID-19 pandemic. This also means that their share value will decrease over time, significantly impacting the share market.

Loss of Tourism Revenue

Tourism-related trips are one of the significant sources of revenue in the UK. However, with the ongoing crisis in the UK, the travel industry will no longer generate as much revenue as it used to before the war in Ukraine. Of course, this is due to route diversions and flight cancellations to Russia and Ukraine. Moreover, the tourism industry will also be affected as few tourists will visit the country. Simply put, the inflation rate will increase not only in the UK but also in other countries whose travel industries are affected by the war in Ukraine.

Reduction in the Share Price

Companies in the travel industry have witnessed a tumble in their share price. For instance, the war in Ukraine has resulted in the reduction of British Airways shares by 5% as of February 2022. Lufthansa Airlines and the UK airline EasyJet also lost 14% of their shares since the war started. This has left uncertainty among investors who put their money into various company shares in the UK’s travel industry. Most of them have even made sales to avoid extreme losses in the long run, and this is evident through online regulated brokerage firms.

If you have invested in the travel industry, it is advisable that you do not panic and make quick sales of your shares at a loss. Although the market is unpredictable, the history of geopolitical crises indicates that the markets will bounce back. So, if you are skeptical about making further investments, consider taking short-term CFD positions using top CFD brokers in the United Kingdom.

Verdict

The war in Ukraine has not only affected the UK travel industry, but the entire Europe, the United States, and Asia. With the UK economy affected, investors in various travel companies are worried. Therefore, it is crucial that you thoroughly analyze the financial markets before making any sales. However, economic analysts advise against selling shares due to fear of losing more money. Instead, consider hedging your existing positions and be hopeful that the stock market will surge again and the travel industry will return to normalcy.

 

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