As more cases of the new bird-flu strain in China worry consumers, decreased domestic air-travel demand sparked a wide sell-off of airline and travel stocks world-wide. Though there has yet to be evidence that the strain is transmissible between humans, the growing number of deaths as a result of the virus is reviving fears of the SARS outbreak a decade ago. Publically listed airlines with flights to China on Hong Kong, China, and Europe indices suffered large declines on top of already softened share prices as a result of greater domestic competition in China and declined interest in air travel.
Leisure travelers may begin cutting back on their trips to China should cases of the virus increase. Furthermore, other tourism-related stocks are seeing declines. Should the cases continue to grow as we enter into tourism season (summer) for China, how will the decreased tourist business affect the Chinese economy? Are consumers acting too quickly in response to the news of the bird-flu strain?