Over the past decade, consolidation has transformed the U.S. airline industry. The four largest airlines now control more than 80% of the market. However, competition is still fierce. American Airlines and United Continental (NYSE:UAL) -- two of the three largest carriers -- are on pace to report sharp earnings declines this year. With oil prices on the rise, profits could continue to move in the wrong direction for both companies in 2018.

By contrast, many of the industry's smaller players have better cost structures than their larger rivals. They also have significantly more room to grow. And in many cases, they offer better service than larger carriers that charge higher prices.

Furthermore, most airline stocks have been beaten down over the past year. In some cases, it's been due to rising costs. In other cases, the problem has been deteriorating unit revenue (a measure of revenue that adjusts for changes in the amount of flying an airline does). As a result, Alaska Air (NYSE:ALK), JetBlue Airways (NASDAQ:JBLU), Spirit Airlines (NASDAQ:SAVE), and Hawaiian Holdings (NASDAQ:HA) all look highly attractive right now. In fact, all four stocks could potentially double (or more) in the next three to five years.

Alaska Air: Fighting through some merger pain

Earlier this year, Alaska Air stock surged as high as the $100 mark, driven by excitement about the company's acquisition of smaller rival Virgin America. However, Alaska Air shares have come back to earth since then, and recently traded around $62.

An Alaska Airlines plane flying above clouds

Investors have cooled on the Alaska Airlines-Virgin America tie-up. Image source: Alaska Airlines.

The main reason for this turbulence is that the Virgin America deal hasn't gone as smoothly as expected. Alaska Air executives recently disclosed that unit revenue fell 8% on "legacy Virgin America routes" last quarter. This contributed to a significant decline in Alaska's profit margin. The company's guidance implies that margins will erode even faster in the fourth quarter.

While this was a disappointing outcome, investors are underestimating Alaska's ability to fix its current problems. Alaska and Virgin America have been facing what appears to be irrational competitive behavior in some markets, weighing on unit revenue. However, management has emphasized that all options are on the table in underperforming markets -- including capacity cuts.

Furthermore, it's important to remember that Alaska Air has only captured a tiny fraction of its expected merger synergies thus far. (Management has estimated that $36 million of the $300 million in total synergies would accrue during 2017.) Most of the benefits will come after Alaska Airlines and Virgin America move to a single reservation system next spring.

After its big plunge this year, Alaska Air stock trades for less than 10 times forward earnings. That's absurdly low, considering that Alaska has huge growth opportunities and is in position to capture more than $250 million of incremental merger synergies in the next few years.

Mint premium service will lift JetBlue to new highs

JetBlue stock is actually higher than it was at this time last year. Nevertheless, at around $19, the stock is still down more than 30% from the all-time high it reached in late 2015. Like Alaska Air stock, JetBlue shares now trade for a little less than 10 times forward earnings.

JetBlue has also been facing some margin pressure recently, but for different reasons than the rest of the industry. First, the company has a heavy concentration of flights in New York and Boston, and worsening air traffic control delays in those markets have wreaked havoc on its operations. Second, JetBlue was hit particularly hard by Hurricanes Irma and Maria, due to its big presence in Florida and the Caribbean (especially Puerto Rico).

Fortunately, JetBlue is addressing both of those issues. While air traffic delays are outside of its control, JetBlue is retooling its flight schedule to better cope with delays going forward. The carrier is also temporarily shifting some capacity from the Caribbean to other leisure markets while Puerto Rico and other vacation destinations rebuild their tourist infrastructure.

Meanwhile, JetBlue's upscale "Mint" service is unlocking huge long-term growth opportunities for the company. Mint flights use a dedicated fleet of A321s outfitted with a premium cabin of 16 lie-flat seats. Customers have shown a willingness to pay very high prices for Mint seats (and the stellar service that comes with them). As a result, JetBlue has seen double-digit pre-tax margin gains in transcontinental markets where it has rolled out Mint service.

So far, JetBlue has just scratched the surface of Mint's potential. Between August 2017 and April 2018, it will upgrade another half dozen routes to Mint. JetBlue also continues to add extra flights on existing Mint routes. And by the end of the decade, new airplane technology could enable it to begin operating Mint flights from New York and Boston to Western Europe.

On top of all these growth opportunities, JetBlue is also in the midst of a major structural cost reduction project. The net result is likely to be strong profit growth for JetBlue over the next five years, driving the stock price much higher.

Spirit Airlines is weathering the storm

Just looking at the numbers, Spirit Airlines looks like a train wreck right now. Last quarter, its adjusted net income plunged by 24% on a 6.8-percentage-point pre-tax margin decline. Spirit could also face a significant increase in unit costs in the near future, as its pilots are demanding big pay raises.

However, Spirit still has one of the highest profit margins in the airline industry. Furthermore, its plunging profitability can largely be traced to price-matching activity by larger rivals (especially United Airlines).

Spirit's industry-leading cost structure will help it weather these competitive headwinds. The carrier is also shifting some capacity to midsize cities, where it won't face much competition from legacy carriers like United. Furthermore, the legacy carriers' plunging profit margins may imply that their price-matching tactics are unsustainable.

Spirit Airlines' profit margin could continue to contract for a few more quarters. But that's already baked into analysts' 2018 earnings estimates. And Spirit Airlines stock looks mighty cheap at a little more than 10 times forward earnings, given that it plans to continue growing at a double-digit clip for the foreseeable future. If margins eventually start to rebound, it will only add to the company's massive long-term profit growth potential.

Hawaiian Holdings: Much ado about not much

Unlike Alaska, JetBlue, and Spirit Airlines, Hawaiian Holdings has had a strong 2017. Analysts currently expect earnings per share to reach $5.56 for the full year, up 7% compared to 2016. Nevertheless, Hawaiian Holdings shares have taken the biggest tumble of all this year, plunging 45% since hitting an all-time high above $60 in late 2016.

A Hawaiian Airlines plane flying over the ocean, with mountains in the background

Hawaiian Airlines' strong profits haven't helped Hawaiian Holdings stock. Image source: Hawaiian Airlines.

Investors are clearly panicked about rising competition in the Hawaii travel market. Next month, United Airlines will significantly increase its flight schedule between Hawaii and the mainland, while Southwest Airlines plans to start flying to Hawaii in late 2018 or 2019. Southwest is even thinking about operating interisland flights, encroaching into a market that Hawaiian Airlines currently dominates.

In the short run, a big uptick in competitive capacity will clearly put pressure on unit revenue at Hawaiian Airlines. However, Hawaiian already enjoys a cost advantage and a revenue premium over United Airlines on Hawaii flights. Thus, it has little to fear from United's growth.

As for Southwest, it doesn't have much of a cost advantage on long-distance flights. Hawaiian Airlines will also benefit from having a premium-heavy configuration. While it may have to drop its regular coach fares, it gets a rising proportion of revenue from customers who are willing to pay extra for a first-class or extra-legroom seat.

The arrival of Hawaiian's new A321neo fleet in the next couple of years will give the airline yet another tool to cope with competition. It will allow Hawaiian to cut capacity on underperforming routes by 25%-35% with no impact on unit costs.

Analysts already expect Hawaiian's EPS to fall by 20% next year. Even based on these low estimates for its 2018 profit, Hawaiian Holdings shares trade for less than eight times earnings. As Hawaiian shows that it has the tools it needs to fend off the competition, the stock could come roaring back.

Adam Levine-Weinberg owns shares of Alaska Air Group, Hawaiian Holdings, JetBlue Airways, and Spirit Airlines and is long January 2019 $10 calls on JetBlue Airways. The Motley Fool owns shares of and recommends Spirit Airlines. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy.