Tour operator TUI has cancelled all British holidays to mainland Spain from Monday until August 9, after the UK government's decision to require travellers returning from the country to quarantine.
The newly-imposed rule to self-isolate, abruptly introduced at midnight Saturday hours after being announced, follows a surge in coronavirus cases in parts of Spain in recent weeks.
Other major British airlines have so far held off cancelling flights to Spain.
TUI, Britain's biggest tour operator, said its decision did not apply to the Balearic Islands and Canary Islands, where COVID-19 case numbers are markedly lower than in parts of mainland Spain.
Meanwhile holidaymakers already in the country will still be able to take their original flight home.
German-owned TUI said customers impacted by the cancellations would be able to receive a full refund or the option to rebook their holiday.
The operator said it was in contact with Britain's Foreign Office “to understand” why the government has introduced quarantine measures for all of Spain, when its travel advice is less stringent for the Balearic Islands and Canary Islands.
“We believe regional travel corridors need to be considered,” it said in a statement.
“The UK Government must work closely with the travel industry as this level of uncertainty and confusion is damaging for business and disappointing for those looking forward to a well-deserved break.”
The UK decision requires people arriving from Spain, a popular holiday destination for many Britons, to self-isolate for two weeks.
Struggling British airlines said they were maintaining their flights but “disappointed” by the move.
“This is sadly yet another blow for British holidaymakers and cannot fail to have an impact on an already troubled aviation industry,” British Airways said in a statement.
EasyJet added it would operate its full schedule in the coming days but that customers who no longer wish to travel could transfer their flights without a change fee or receive a voucher for the value of their booking.
“We are disappointed that the government has decided to impose a quarantine requirement for those travelling from the whole of Spain since the increased occurrence of coronavirus is regional rather than nationwide,” the budget carrier said.
The new quarantine measures has dismayed the tourism sector, which was aiming to recover some of its revenues during the peak summer weeks after being decimated by months of lockdown.
Irish no-frills airline Ryanair said Monday it had nosedived into the red in its first quarter — suffering a loss after taxation of 185 million euros ($216 million) — due to the pandemic.
Russ Mould, investment director at AJ Bell, said the UK move was “the news the travel industry hoped would never happen”.
“It shows the clear risks to the travel industry that its recovery will not be a smooth ride,” he added.
“The government imposing restrictions puts a spanner in the works and effectively derails their strategy for clawing back some of the losses experienced earlier this year.”
Investors signalled their unease, with stocks in large operators in the sector down Monday morning on the London Stock Exchange.
IAG, the parent company of British Airways, lost around 9 percent, while EasyJet was down 11.27 percent and TUI 11.10 percent, in trading up to 0940 GMT.