It's big news in the airline business: Southwest Airlines (NYSE: LUV) is buying AirTran (NYSE: AAI) for $1.4 billion. While the announcement pushed several airline stocks upward, investors should temper any excitement about this industry. There are better bargains elsewhere.

The Southwest-AirTran deal seems like it will generally be good for the companies involved, and perhaps the industry as a whole. Southwest will take on more debt and AirTran's lease obligations, but it will be able to seriously beef up its presence in many markets. By taking out a low-cost competitor, it may be able to raise prices. A bigger Southwest may also put more pressure on other airlines -- but if Southwest raises its prices, that could help its peers.

Overall, though, I don't see enough reason to get excited about this development. The airline business's many challenges remain unchanged by the deal: frequent fare wars, volatile fuel prices, complex logistics, unpredictable and disruptive weather, costly equipment and training, and so on. Warren Buffett wisely quipped that "if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."

Better bets
Of course, if you had to pick one airline in which to invest, Southwest seems the best bet. It's posted 37 straight years of annual profits, and maintains compelling competitive advantages including a low cost structure and high customer satisfaction.

Before you look at other airlines, though, consider looking elsewhere. I can't help thinking there are more attractive opportunities for investors, in less difficult lines of business:

  • If you're bullish on the prospects for air travel, consider Boeing (NYSE: BA). Whichever airlines end up on top, Boeing sells to the entire industry -- and the military, to boot.
  • If you're eager to invest in transportation, look at railroad companies. Canadian National Railway (NYSE: CNI) operates in the U.S., Canada, and Mexico; sports steep profit margins; and has been upping its dividend aggressively in recent years.
  • If you simply want to benefit from the growth of the travel industry, consider including stocks from related sectors. For instance, lodging specialist Las Vegas Sands (NYSE: LVS) offers hotels and casinos from Las Vegas to China.

Don't ever let yourself get too focused on any one industry. Each sector harbors stronger and weaker denizens. Cast your net wide and seek truly powerful businesses.

These stocks are poised for global domination.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Canadian National Railway and Southwest Airlines are Motley Fool Stock Advisor recommendations. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.