The Webjet Limited (ASX: WEB) share price is in the red on Monday amid concerns the cost of international travel could increase.
At the time of writing, the Webjet share price is $5.09, 3.6% lower than its previous close.
Monday is proving to be hard on the broader market as well. Right now, the S&P/ASX 200 Index (ASX: XJO) and the All Ordinaries Index (ASX: XAO) have both fallen around 1.2%.
Let’s take a look at what might be weighing on the share price of Webjet and its ASX travel peers.
What’s dragging the Webjet share price lower?
The Webjet share price is slumping as the price of oil rises and Russian President Vladimir Putin warns airlines avoiding flying over Russia will see costs escalate.
The price of Brent crude futures is currently up 8.3% to US$127.90 a barrel, according to data from CNBC. Meanwhile, West Texas Immediate futures is up 7.5% to US$124.36 per barrel.
Additionally, many international airlines, including Qantas Airways Limited (ASX: QAN), are taking longer routes to avoid flying over Russia.
The new flight paths likely create extra plane time for travellers and, assumably, additional costs for airlines.
According to Russian media outlet, TASS, Putin predicts such costs could see many international airlines increasing airfares to recover the extra expenses.
Qantas’ amended ‘kangaroo route’ has been flying over the Middle East and southern Europe to dodge Russia’s landmass since last Sunday. Doing so adds an hour of flight time to the trip.
Of course, higher ticket prices could potentially harm Webjet’s profit margin. Therefore, concerns of additional costs facing airlines could be weighing on the Webjet share price today.
At least the online travel agency’s stock isn’t alone in the red.
The Webjet share price is still outperforming those of Qantas, Flight Centre Travel Group Ltd (ASX: FLT), and Corporate Travel Management Ltd (ASX: CTD). They’ve fallen 7.4%, 5.7%, and 4.6% respectively.
The post Why is the Webjet (ASX:WEB) share price spiralling 4% today? appeared first on The Motley Fool Australia.
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More reading
- These are the 10 most shorted ASX shares
- Is it a buy? Broker tips 31% upside in Webjet (ASX:WEB) share price
- How did the Webjet (ASX:WEB) share price travel in February?
- Why is the Webjet (ASX:WEB) share price having such a lousy start to the week?
- These are the 10 most shorted ASX shares
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 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 Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet Ltd. 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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