What happened

The so-called "reopening trade" gained velocity in early 2021, and airline stocks were among the beneficiaries. Southwest Airlines (NYSE:LUV) gained 13.9% in the first six months of the year, according to data provided by S&P Global Market Intelligence, and was up as much as 36% in April before falling back some.

LUV Chart

LUV data by YCharts

So what

Airlines were among the industries hardest hit in 2020 by the pandemic, with travel demand all but evaporating a year ago. As the vaccine rollout picked up pace so did demand, and some of the sectors that were hardest hit at the height of the pandemic posted impressive gains starting last fall and heading into this spring.

The airlines were among them. Southwest's mid-spring 36% gain for the year actually trailed a lot of other airlines including American Airlines Group (NASDAQ:AAL), JetBlue Airways (NASDAQ:JBLU), and Hawaiian Holdings (NASDAQ:HA). One thing all of those airlines have in common is they are all aggressively chasing leisure business.

A Southwest 737 in flight.

Image source: Southwest Airlines.

With tourists, and not businesses, leading the way back to the airports, the airlines that have route networks and ticketing policies favored by leisure travelers have seen the recovery materialize faster than rivals who rely on corporate accounts.

The rally fizzled in recent months amid concerns about new variants, and based on suggestions from analysts that the stocks have begun to get ahead of the businesses.

Now what

It's an odd moment right now for airline investors, and in particular holders of Southwest. On one hand, the airlines are definitely off the lows from the pandemic. Southwest remains a best-in-class operator with a strong balance sheet and the wherewithal to ride out whatever potential turbulence lies up ahead. On the other hand, the company's longtime CEO Gary Kelly is preparing to step down, and the airline is having a miserable summer when it comes to staffing its flights and avoiding cancellations.

There's nothing wrong with holding Southwest for the long haul and riding out the current storms, but I'd advise caution to those considering buying in right now. Until Southwest's internal issues are behind it and we are sure the pandemic is fully under control, there is likely a ceiling on how high the airlines can fly, and after the first half rally there might not be much more room to run for now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.