Borders just reopened so why is the Flight Centre (ASX:FLT) share price falling today?

Experts believe it may take several years for tourism levels to rebound to pre-pandemic numbers.

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Key points

  • Flight Centre share price joins broader market selloff
  • Australia's international border reopens to fully vaccinated travellers today
  • It could be 3 or more years before tourism rebounds to pre-COVID levels

The Flight Centre Travel Group Ltd (ASX: FLT) share price is in the red in morning trade.

Flight Centre shares are down 0.8% to $20.38 per share, having closed Friday at $20.54 per share.

But wait, aren’t Australia’s international borders opening back up today for the first time in almost 2 years?

Travellers are coming back Down Under

The Flight Centre share price is under pressure today despite what should be good news for the travel industry.

Today marks the lifting of Australia’s seemingly interminable international pandemic border closure. Unless you’re trying to travel to or from Western Australia. In which case that will be on 3 March.

Qantas Airways Limited (ASX: QAN) CEO Alan Joyce was encouraged by the development.

As The Australian reported, the airline will see 8 international flights arrive in Australia today. It expects some 14,000 international passengers to fly into Australia’s airports on its planes this week.

According to Joyce, “We can clearly see from the Australian government’s announcement that people are very keen to come back to Australia, and we continue to see strong bookings out of the US and UK, as well as South Africa and Canada.”

More turbulence ahead for the Flight Centre share price?

While Joyce rightfully points to the immediate lift in numbers from the reopening, there appears to be a long way to go before international tourist numbers return to their pre-COVID days.

According to ABC News, January 2020 saw 2.26 million overseas arrivals in Australia. And it could be 3 years before we see those kinds of numbers again.

Margy Osmond, CEO of Tourism and Transport Forum Australia, highlights the long road ahead for the tourist industry. Issues which could throw up more tailwinds to the recovery of the Flight Centre share price.

According to Osmond (quoted by ABC News):

It’s really critical to understand we may never go back to what were pre-pandemic levels. The world of travel has changed globally, it’s not just about Australia, and travel confidence is not what it once was.

Regarding a timeline for the potential return to pre-pandemic levels, Osmond said, “Realistically speaking, I can’t see it as being at a level that there was anything like we were pre-pandemic until two or three years from now.”

Osmond also highlighted issues of a loss of skilled labour in the industry along with stiff competition from other nations.

“This is a completely cutthroat global market now, every country in the world is looking to get those particularly high-yield leisure tourists back,” she said. Osmond added, “We’ve lost a whole generation of some of the most important and skilled workers in the industry.”

Some other unwanted potential turbulence for the Flight Centre share price is the possibility of a shooting war in eastern Europe where tensions between Russia and Ukraine remain high.

And then there’s soaring energy costs. With jet fuel prices hitting decade highs, this could see airlines forced to up their ticket prices, which in turn could impact international tourist numbers.

Flight Centre share price snapshot

The Flight Centre share price has performed strongly in 2022, as domestic travel resumed and investors eyed the return to international travel. Share are up 9% year-to-date compared to a 6% loss posted by the S&P/ASX 200 Index (ASX: XJO) in that same period.

Flight Centre shares remain down 42% since 14 February 2020.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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