After years of hoarding cash to protect against the dual threats of recession and skyrocketing fuel prices, a few airlines finally began to reward shareholders last year. Delta Air Lines (NYSE:DAL) and Alaska Air (NYSE:ALK) instituted new dividends in May and July, respectively. Meanwhile, Southwest Airlines (NYSE:LUV) quadrupled its dividend to keep up with Delta.

All three companies have also been actively repurchasing stock to boost their earnings per share. In the race to be the most generous to their shareholders, Delta, Alaska, and Southwest have all rolled out bigger capital return programs this month.

Big money at Delta
Delta Air Lines probably made the biggest splash of any airline by announcing a plan to return $2.75 billion to shareholders in the next two years. First, Delta will increase its quarterly dividend by 50% to $0.09 as of September. Second, Delta plans to spend $2 billion on buybacks between now and mid-2016.

Delta just announced plans to return $2.75 billion to shareholders by mid-2016.

It's tricky to evaluate the impact of share repurchase programs in advance because the company is under no obligation to follow through on its stated plans. However, Delta shareholders can be fairly confident that Delta will do what it says -- or more.

After all, a year ago, Delta told investors that it planned to spend $500 million on buybacks over the next 3 years. Today, the company is on the verge of completing that buyback two years early! In addition, Delta is on track to generate about $3 billion in free cash flow, providing plenty of cash to support its buyback plans.

Southwest responds
Last year, Southwest quickly responded to Delta's capital return program by quadrupling its own dividend. This year, Southwest waited just a week after Delta's announcement to dramatically boost its own dividend and share buyback plan.

Southwest Airlines is following Delta again with a big increase in its dividend and buyback plans

Like Delta, Southwest is raising its quarterly dividend by 50% this year (from $0.04 to $0.06). Southwest is also ramping up its buyback plans. Southwest recently completed its existing share repurchase program, and its board has authorized another $1 billion in share buybacks.

Southwest didn't put a time frame on its share repurchase activity, but like Delta it has a strong track record of following through on share repurchase announcements. Since August 2011, Southwest Airlines has returned $1.7 billion to shareholders, primarily through buybacks. In fact, Southwest already began a $200 million accelerated share repurchase to kick off its new buyback program.

Southwest has plenty of financial capacity to complete its $1 billion share repurchase. At the end of last quarter, the company had about $3.5 billion in cash and short term investments available, which is probably more liquidity than an airline of Southwest's size needs.

Last, but not least
Alaska Air has not been left out in the most recent flurry of airline capital return programs. Earlier this week, it announced a new $650 million share repurchase authorization. While this is smaller than the Delta and Southwest buyback programs on an absolute dollar basis, it's actually the biggest one when adjusting for size or market cap.

Alaska Air also unveiled a large share buyback program last week.

At current market prices, $650 million would be enough for Alaska to retire 10% of its shares. Alaska has plenty of flexibility to execute that level of share repurchase in the next 2 years or so. Alaska Air had more than $1.3 billion of cash and short-term investments on its balance sheet at the end of 2013. Furthermore, the company expects to generate at least $300 million of excess cash in 2014.

Foolish final thoughts
As three of the most successful airlines in the U.S., Delta Air Lines, Southwest Airlines, and Alaska Air have delivered big gains for shareholders in the past few years. However, today their shares look more expensive than those of some rivals with less consistent profitability track records.

Some investors would prefer to take the risk of betting on a cheaper airline stock -- in the hope that it will eventually catch up to the industry leaders. While Delta, Southwest, and Alaska can't offer investors cheap stock prices anymore, they do share one big advantage over less successful rivals; they are generating lots of excess cash!

This allows Delta, Southwest, and Alaska to satisfy shareholders through bigger dividends and buybacks: something that weaker rivals can't afford. As long as airline profits continue to soar, investors should expect more aggressive moves by these companies to stand out from the crowd through generous dividends and share buybacks.

Adam Levine-Weinberg and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.