Airlines don't normally spring to mind as an investment-worthy industry: from heavy capital investments to high fuel costs, from heavy debt loads to terrorist fears, major airlines can be a plague to profits, both for themselves and investors.

Even Warren Buffett is skeptical about making money in airlines (he should know from his experience with USAir). In a 2002 interview he was famously quoted as saying:

If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money. But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in.

You've got huge fixed costs, you've got strong labor unions, and you've got commodity pricing. That is not a great recipe for success. I have an 800 number now that I call if I get the urge to buy an airline stock. I call at 2 in the morning and I say: 'My name is Warren, and I'm an aeroholic.' And then they talk me down.

High-flying failures immediately take flight: Delta, Northwest Airlines (NYSE:NWA), and United Airlines (NASDAQ:UAUA) have all sought bankruptcy protection in recent years.

Surprise, surprise
Considering the general consensus opinion that airlines should remain grounded as an investment, it's interesting to see them taxiing on the runway of Motley Fool CAPS. Over the past year, major airlines took off with a nearly 44% return. That doesn't put them at the top, but for a generally despised industry, that's pretty surprising.

Both Continental (NYSE:CAL) and AMR (NYSE:AMR), the parent of American Airlines, had pretty good years, generating total returns of 43% and 19%, respectively. Yet when you see that US Airways (NYSE:LCC) lost more than 32% and Southwest Airlines (NYSE:LUV) was down by 5% during the same period, it makes the industry's performance that much more remarkable.

A fine China place setting
So how did the airline industry generate such remarkable returns, in fact outpacing machine tools (up 42%) and even medical appliances and equipment (up 27%)? In a word, China. Both China Eastern Airlines and China Southern Airlines (NYSE:ZNH) had terrific returns over the past 12 months rising 252% and 193%, respectively. Trading in the former has been halted since the end of May at the company's request pending a big announcement. Speculation is that Singapore Airlines will be taking over the airline.

Before trading being halted, CAPS investors were divided on the outcome of China Eastern. Redmust figured there was still a lot of potential left in the stock. "China Eastern is a great growth play, with oil prices coming down and air travel up in China for 2008 Olympics I see good things in their future!"

BeijingBill wasn't so sure.

This company's stock price has been doing RIDICULOUS things over the last year, totally disconnected to the company's underlying condition. It has a very illiquid market, with only a couple thousand shares exchanged on a given day. It's shot up considerably on rumors of an acquisition, but there is no reason to believe the acquisition would pay such an exorbitant premium to stock prices. The only people making money on this stock are inside traders. Too risky -- stay away from this one!

It's a different picture with China Southern, a four-star stock (out of five stars) where bulls overpower bears 9-1 and more than half of all CAPS players rating the airline as an "outperform" are considered All-Stars.

Top-rated CAPS player hirshey calls it a "no brainer." The airline is poised to capitalize on the changing face of the country. "As China continues to develop and international investment increases, more flights will be made nationally and across the globe."

One Fool's view
China is a hot investment these days, and there are certainly demographics and events on the horizon that can continue to keep it rising. But if airlines get too "hot," will the government step in as it did with steel and cement to "cool" them off? And as good as airlines have been, I'd have to side with Warren Buffett on this one. Airlines have always been a tough industry to make a profit in, whether you're running the planes or investing in them.

There are still a lot of international investment opportunities that are just too good to ignore. In fact, Jeremy Siegel of the Wharton School of Business thinks U.S. investors need to "go global" and look overseas for as much as 40% of their portfolios. It's why Bill Mann and the rest of his investment team at Motley Fool Global Gains focus solely on those markets.

What's your view?
Have your say on what makes a good investment at Motley Fool CAPS. Work with more than 30,000 rated professional and novice investors to uncover the best companies, both at home and abroad. Best of all, it's completely free!

If you're interested in taking advantage of the benefits of international investing, consider a 30-day free trial of Global Gains. Even if you just want to take a peek at the Global Gains team's inaugural picks, it's definitely worth your while.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.