TRUMP TRAVEL BAN LEAVES AIRLINE STOCKS FACING SOME TURBULENCE.

Already taking its toll on stranded passengers and their families over, U.S. President Donald Trump’s travel ban inflicted some pain on the airlines sector Monday, as investors reacted to a potential slowdown in traffic, rising costs and possible retaliation.

American Airlines Group Inc. and United Continental Holdings Inc. were among the biggest decliners on Monday, falling more than four and three per cent respectively. Airlines across the globe took a hit, with Canada’s largest carriers — Air Canada and WestJet

Airlines Ltd. — each dipping about 2 per cent.

On Friday, Trump signed an order that temporarily blocks refugees from entering the U.S., and bars travellers from Iran, Iraq, Syria, Libya, Somalia, Sudan and Yemen.

As protests continue at several of the largest airports in the U.S., causing some travellers to seek other options, airlines are paying the price for refunded tickets. They also face an uncertain longterm outlook, as Trump’s actions could trigger a wave of global travel restrictions and changes.

The International Air Transport Association, which represents 265 airlines around the world, said Trump’s executive order was issued without prior coordination or warning, and caused confusion among both airlines and travellers.

“It also placed additional burdens on airlines to comply with unclear requirements, to bear implementation costs and to face potential penalties for non-compliance,” IATA said in a statement.

More legal challenges and opposition is expected in the coming days, after two judges ruled the order could not turn away those who already have legal status in the U.S. Reports also pointed to dissent in the U.S. State Department, as diplomats criticized the travel ban as ill-planned, detrimental to U.S. economic interests, and not a useful way to combat terrorism.

Rajeev Lalwani, an analyst at Morgan Stanley, thinks the impact of the travel ban on U.S. airlines will be shortlived and relatively modest.

“Clearly, disruption at major airports would not be helpful in regard to ease of travel, but our expectation is it will be temporary in nature and return to normal in the coming days,” he said.

As for travel from countries restricted by Trump’s order, Lalwani noted legacy U.S. carriers have limited direct exposure to those markets, with more of their international routes spread between Europe, Asia, and Latin America.

Air Canada said the order is expected to affect only a “very small handful” of its passengers, and has implemented a re-booking policy that waives change fees and allows for refunds. WestJet said foreign nationals from affected countries who are denied entry will receive full refunds, while Porter Airlines is temporarily waiving change and cancellation fees for those affected, as well as issuing full refunds for cancelled itineraries.

The Canadian government has said holders of Canadian passports, including dual citizens, will not be affected by the ban.

Michael Hewson, chief market analyst at CMC Markets, said investors are waking up to the downside of what a Trump presidency might mean for risky assets.

“The weekend executive order to implement more stringent vetting procedures to visitors to the U.S. from specific destinations, as well as a wider travel ban, could well be the beginning of this realization, as investors shed their goldilocks blinker.”