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ASX 200 travel shares sank on Friday

The ASX 200 (ASX: XJO) travel shares sank today. There is another round of uncertainty relating to a COVID-19 or coronavirus variant.

Here is the state of play from the travel sector:

The Webjet Limited (ASX: WEB) share price dropped 5.1%.

Flight Centre Travel Group Ltd (ASX: FLT) saw its share price fall 7.5%.

The Corporate Travel Management Ltd (ASX: CTD) share price declined by 5.8%.

Qantas Airways Limited (ASX: QAN) saw its share price fall by 5.5%.

What’s going on?

According to reporting by global media, there is a new COVID-19 variant that could be more problematic for the world that all the variants that have been so far.

The ABC reported that the UK Health Security Agency (UKHSA) said the new variant had a spike protein that was dramatically different to the original coronavirus variant the vaccines were based on.

It said it had mutations that were likely to evade the immune response generated both by prior COVID-19 infection and vaccination. It also had mutations associated with increased infectivity.

UK Health Minister Sajid Javid said:

“What we do know is there’s a significant number of mutations, perhaps double the number of mutations that we have seen in the Delta variant. And that would suggest that it may well be more transmissible and the current vaccines that we have may well be less effective.”

In response to this, the UK is temporarily banning flights from South Africa, Namibia, Botswana, Zimbabwe, Lesotho and Eswatini.

British travellers returning from those destinations would have to quarantine.

What’s the danger for ASX 200 travel shares?

Travel profit in 2020 was smashed because there was hardly any international travel.

If countries decide to close the border to each country that reports seeing this new variant, then the world could see a lot less travel again. But this is very early to be thinking about that sort of outcome.

There have been other variants that have faded away (due to Delta winning) and there is very limited international spread of this new variant. The world has vaccines that are working and would hopefully help against this one, or at least be easily changed.

I’m not sure what’s going to happen next. This could prove to be an opportunity to consider ASX travel shares. It depends how transmissible and vaccine-evasive this new variant is. It also depends what countries do. I’m not sure some places would tolerate another lockdown.

If there is a crash, I think ASX 200 travel shares could prove to be an interesting idea.

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At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.

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