Airline stocks have a long history of boom-and-bust cycles, but today’s industry looks very different than it did a decade ago. Consolidation has left a small group of dominant carriers with better pricing power, stronger balance sheets, and more disciplined capacity management.
Travel demand has rebounded sharply since the pandemic, helping the strongest airlines return to profitability. While rising fuel costs and labor shortages remain real risks, some carriers are far better positioned than others.
For investors who understand the volatility, here are the best airline stocks to consider and how to invest in the sector.
Top airline stocks to consider
Airlines fall into three main categories
Before choosing a stock, it helps to understand how airlines differ:
- Full-service airlines operate global networks with multiple cabin classes and significant international exposure.
- Discount airlines focus on low fares, lean operations, and optional add-on fees.
- Regional airlines operate smaller jets, often under the brand of larger carriers.
Each model carries different risks, margins, and growth potential, which is why not all airline stocks perform the same.
Delta Air Lines
NYSE: DAL
Key Data Points
This airline is the driving force behind much of the recent innovation in the industry. Atlanta-based Delta Air Lines (DAL -0.98%) kicked off a round of consolidations that helped stabilize the business when it acquired Northwest Airlines in 2008, and it has revamped pricing to better compete with discounters. Delta even bought an oil refinery to help ensure its access to jet fuel supplies.
More recently, Delta was out in front of the pack when it came to forging a new labor deal with its all-important pilots group. Where Delta goes, its rivals follow.
Post-pandemic Delta has a stable balance sheet and relatively strong labor relations, making it a good choice to be among the first international carriers to fully recover.
United Airlines Holdings
NASDAQ: UAL
Key Data Points
Southwest Airlines
Alaska Air Group
NYSE: ALK
Key Data Points
Alaska Air Group (ALK -4.63%), as its name suggests, has largely been focused on the U.S. Pacific Northwest for much of its history. But thanks to its 2016 purchase of Virgin America and 2023 acquisition of Hawaiian Airlines, the company is now a major player down the West Coast into southern California and has a transcontinental business, as well.
Alaska has historically partnered with its bigger rivals, giving its customers access to the entire globe and its partners more service to small Pacific Northwest markets. These days, Alaska is tied most closely to American Airlines Group (AAL -1.67%).
Through the years, Alaska has developed a reputation as a solid operator that has outperformed its larger rivals. The airline experienced some hiccups when integrating Virgin America, but has regained altitude and once again ranks as one of the most intriguing investments in the sector.
Frontier Group Holdings
Frontier Group Holdings (ULCC -7.01%) is a new breed of discount carriers that provide very little other than a seat for the price of a ticket, charging for small frills like beverages and carry-on bags that other airlines provide for free.
The business model is the subject of many complaints and jokes, but price-sensitive consumers pack the planes. And thanks to its low-cost structure, Frontier can win a price war against almost any other carrier in its market.
Frontier is unlikely to ever join the ranks of global airlines like Delta or United, and might never enjoy the scale of Southwest. However, it offers a niche product that has made it the fastest-growing airline in the U.S. and has a large book of jets on order for future expansion.
What drives airline stock performance
Airline stocks tend to move together, but long-term performance depends on a few key factors:
- Travel demand: Leisure travel has become more consistent year-round, while business travel remains more cyclical.
- Fuel costs: Jet fuel is often an airline’s largest variable expense and can quickly pressure profits when oil prices rise.
- Labor availability: Pilot shortages and labor contracts can affect costs, schedules, and reliability.
- Capacity discipline: Airlines that manage routes and seat supply carefully tend to outperform those that chase growth at any cost.
The strongest airlines are those that can stay profitable even when one or more of these factors turns against them.
Understanding the airline sector
Investors should understand several airline-specific terms before buying any stock. Here's what you need to know:
- RASM: Short for revenue per available seat-mile, RASM is a measure of airline profitability. RASM is important because all flights have different fare and cost structures depending on many variables, including flight distance and aircraft type. Simply looking at total revenue or expenses won't give you the full picture of profitability or margins.
- CASM: Short for costs per available seat-mile, CASM is an airline’s total costs divided by the number of available seats, then multiplied by miles flown. It measures expenses the way RASM measures sales.
- Load factor measures how well an airline is filling its seats. If 60 of 100 seats on a flight are full, the flight's load factor is 60%.
Airlines provide this information on earnings releases and conference calls.
How to invest in airline stocks
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Are airline stocks right for you?
Airline stocks can be rewarding, but remember that the sector is cyclical, and profits can swing quickly with fuel prices, labor costs, and the broader economy.
If you can tolerate volatility and believe travel demand will grow over time, a well-run airline can offer leveraged exposure to economic expansion. If you prefer steadier returns, consider limiting airlines to a small portion of your portfolio or using an airline ETF for diversified exposure.
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FAQ
Investing in airline stocks: FAQ
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