Dow Transports have rallied hard so far this year as hopes of a post-COVID-19 rebound in global travel have been stoked by the advent of the first generation of vaccines (even though they haven't done much to prevent a potentially mutant-driven rebound in India that is eclipsed anything seen before in terms of mortality). But as we have pointed out, new travel advisories in the US have prompted some analysts to reconsider the odds of a rapid recovery in international travel, envisioning a world of "vaccine passports" that puts even more pressure on global tourism.
But pretty soon, the US might be forced to reconsider these warnings, even if COVID-19 numbers keep climbing, as the EU moves toward a policy of unabashed embrace of "vaccine passports".
With many EU member states desperate to revive tourism traffic, the New York Times last night published the latest in a series of reports sketching out European plans to use "vaccine passports" to try and bolster their tax base while taking enough precautions to assuage fears about another COVID-19 surge.
Citing an interview with European Commission head Ursula von der Leyen, the NYT reported that Europe plans to allow American tourists who have been fully vaccinated to visit the EU over the summer. The message was unmistakable: the interview was intended to read like a "welcome back" banner to antsy Americans, and travel stocks are rallying as a result. Von der Leyen cited the "advanced talks" between US and European regulators as one among many reasons why Europe feels justified launching "vaccine passports" (though the NYT report notably avoided that language).
Technical discussions have been going on for several weeks between European Union and United States officials on how to practically and technologically make vaccine certificates from each place broadly readable so that citizens can use them to travel without restrictions.
These discussions are continuing, officials in Brussels said, and 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. For example, a traveler to Europe could get an E.U. vaccine-certificate equivalent on arrival after showing a bona fide certificate issued by his or her own government.
The hope, officials said, is that this step would soon be unnecessary as government-issued vaccine certificates issued by foreign governments would be acceptable and readable in the European Union, and vice versa.
The European Union itself has begun the process of furnishing its own citizens with “digital green certificates,” which will state whether the traveler has been vaccinated against Covid-19; has recovered from the disease in recent months; or has tested negative for the virus in the past few days. Europeans will be able to use those to travel without added restrictions, at least in principle, within the bloc of 27 nations.
The EU is moving to push this shift in policy despite the WHO's urging that "vaccine passports" would risk discriminating against poorer nations where vaccines aren't as accessible. Much of the world isn't expected to reach the mythical "herd immunity" threshold until 2024, if not later.
While Brussels took the liberty of unilaterally unveiling its planned policy switch, von der Leyen reluctantly advised readers that individual EU member states reserve the right to impose more restrictive limits on tourism...
Based on Ms. von der Leyen’s comments, the European Commission will recommend the change in travel policy, though individual member states may reserve the right to keep stricter limits. They might not permit citizens from outside the bloc to visit or might enforce restrictions like quarantines, even on visitors who have vaccination certificates.
...however unlikely that might be, from a financial standpoint.
But countries like Greece, Spain, Italy, Portugal and Croatia that welcome millions of American tourists each summer, and greatly depend on them for income and jobs, are set to jump at the opportunity to reopen to the American tourism market with the E.U.’s blessing.
Since the start of the pandemic, nonessential travel to the EU has been officially banned with the exception of visitors from a short list of countries with very low caseloads of the virus, including Australia, New Zealand and South Korea. However, as the halt in tourism has battered tax revenue just when it was most needed, some of the more financially-distressed EU members have already taken steps to accelerate the return of American tourists. Greece, for example, said last week that it would open its borders to travelers from the US starting Monday (provided they show proof of vaccination or a negative coronavirus test, of course).
Investors celebrated the news by bidding up the Stoxx 600 Travel & Leisure Index, which outperformed the broader market and reached a one-week intraday high after sinking last week on concerns about India's second wave, and the new US travel advisory. Shares of long-haul carriers like Lufthansa and British Airways parent IAG lead gainers, both of which were up more than 4%.