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
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Delta Air Lines (NYSE:DAL) | $43.4 billion | 1.01% | Airlines |
| United Airlines (NASDAQ:UAL) | $33.6 billion | 0.00% | Airlines |
| Southwest Airlines (NYSE:LUV) | $25.1 billion | 1.48% | Airlines |
| Alaska Air Group (NYSE:ALK) | $6.2 billion | 0.00% | Airlines |
| Frontier Group (NASDAQ:ULCC) | $1.1 billion | 0.00% | Airlines |
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
United Airlines Holdings
NASDAQ: UAL
Key Data Points
Southwest Airlines
NYSE: LUV
Key Data Points
Alaska Air Group
NYSE: ALK
Key Data Points
Frontier Group Holdings
NASDAQ: ULCC
Key Data Points
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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