Airline Stocks List

Looking for airline stocks to invest in? Airlines are notoriously fickle companies since many factors go into their continued operations. While airlines aren't as heavily regulated as they were in past decades, these companies still have to deal with quite a bit of federal oversight, and commodity prices like oil can influence their profits. 

But airline stocks intrigue even renowned investors like Warren Buffett, and air travel is rebounding significantly now that COVID-19 is in the rearview. In this article, we'll look into airline stock trends for 2023 and the pros and cons of adding these companies to your portfolio.

What to Know About the Airlines in 2023

Few industries suffered more during the pandemic than airlines. With travel halted, even the best airline stocks plummeted in March 2020. Many are yet to fully recover to their previous highs, including the United States' "big three": American, Delta and United (more on them later).

When travel began to reopen, the airplane stocks were once again hit with a shock, this time by Russia's invasion of Ukraine, which sent oil prices skyrocketing and significantly increased the cost of fuel. Fueling planes is one of the most significant costs incurred by airlines, and the price per gallon reached multi-year highs in June 2022. The most recent Bureau of Transportation Statistics (BTS) report showed airline companies spent $4.63 billion on fuel in January 2023 at an average price of $3.28 per gallon. Consumption has rebounded near January 2019 levels, but costs remain elevated.

The Federal Aviation Administration (FAA) regulates air travel in the United States and oversees the certification of planes and pilots and the management of airports. Following the September 11 attacks, the Transportation Security Administration (TSA) created an additional safeguard for passengers and travel hubs.

Trends in the Airline Industry

The International Air Transport Association (IATA) projects a return to profitability for the airline industry in 2023. However, several headwinds remain in place for the beleaguered sector, and low stock prices still prevail.

• Staffing: Airlines had trouble finding pilots and flight attendants in 2022, and staffing remains a concern in 2023, primarily for pilots now demanding much higher wages.
• Costs: Wages aren't the only cost concerns airlines are dealing with; fuel remains expensive, although prices have dipped below 2022 peaks.
• Demand: After being cooped up for the better part of two years, travel demand rebounded sharply in 2022 and shows no signs of slowing down in 2023. Even the constant threat of recession has yet to cause consumers to rethink their travel plans.

Learn more: Will Airline Stocks Recover?

Types of Airline Companies

Airline companies can break down by size, location and the type of service they offer passengers. For this article, we'll break down airline stocks based on the three distinct types of business models they employ to service customers.

Full-Service Carriers (FSC)

Also known as network or legacy airlines, these are the largest players in the industry that serve the broadest range of clients and business travelers. FSC airlines have large fleets of planes offering domestic and international travel with daily flights, rewards for frequent fliers and multiple classes of travel like business and first class. These firms are household industry names like United Airlines Holding Inc. (NASDAQ: UAL), American Airlines Group Inc. (NASDAQ: AAL) and Delta Air Lines Inc. (NYSE: DAL).

Learn more: Is Delta Air Lines Stock a Buy? and Is American Airlines a Good Stock to Buy?

Low-Cost Carriers (LCC)

Below the full-service airlines are the low-cost carriers, which provide service to limited popular destinations and have smaller aircraft fleets. Frequent flier programs don't exist with these carriers, and they keep added perks to a minimum. An LCC aims to provide affordable and convenient travel to a centralized list of destinations, usually within the domestic airspace of the carrier's home country. In the United States, the most recognized LCC is Southwest Airlines Company (NYSE: LUV), which offers flights to 42 states. (Learn more about how to buy Southwest Airlines stock.) Other LCCs include JetBlue Airways Corp. (NASDAQ: JBLU) and Ireland's Ryanair Holdings PLC (NASDAQ: RYAAY).

Ultra-Low Cost Carriers (ULCC)

Finally, we have the ultra-low-cost carriers who offer the cheapest available tickets with no frills, luxuries or added services. If you've ever flown on a ULCC, you may have heard the phrase "bus in the sky," since that's what travel on one of these flights resembles. You won't find fancy drinks, movies or any other special amenities, and each additional service, like baggage check and seat selection, carries a fee. The ULCCs you're probably most familiar with are Spirit Airlines Inc. (NYSE: SAVE) and Frontier Group Holdings Inc. (NASDAQ: ULCC).

Features to Look for in Airline Stocks

Finding the best airline stocks to invest in requires a different evaluation than most stock research. Airlines face heavy regulation and unpredictable costs, and their stocks haven't always rewarded investors. Your reasoning must be sound if you plan to invest in these companies, such as the 10 best airline stocks to buy.

Company Health

Overvalued airlines rarely make a good investment, so the first features you should look at are figures like enterprise value and debt-to-capitalization rate.

• Enterprise value: To find the enterprise value, take the company’s total market cap and add the value of all preferred stock, long and short-term debt and any minority interest claims. Take this total and subtract the company’s cash and cash equivalents (which is all current cash holdings plus bank deposits) and you’ll get the enterprise value. Calculating enterprise value requires some digging into the balance sheet.
• Debt-to-capitalization rate: Commonly used to measure a company’s solvency (always a pertinent issue with airlines), the debt-to-capitalization rate is found by taking the company’s total debt (short and long-term) and dividing it by total capital. Total capital is a combination of total debt plus shareholder equity. If the rate here is too high, it could show an airline using too much debt to finance its operations.

Airlines always seem cheap when using the price to earnings ratio, or P/E ratio (share price divided by earnings per share), so that's not an ideal metric for finding the best airline stocks to buy.

Free Cash Flow

Not only are airlines heavily regulated and beholden to fuel costs, but capital equipment in the industry is expensive. Airplanes are hard to make! And the equipment used to fuel them, service them and clean them also is costly. When evaluating airline stocks, monitor the free cash flow yield. Airlines with cash flow problems may struggle to fulfill their operating expenses.

Management

Finally, airlines don't have the best reputations. In fact, you'd be hard-pressed to find another industry the public is sour on than the airlines. Part of this is due to management: many airlines mismanage customer relations and financial matters. Most major U.S. airlines have declared bankruptcy at one point or another (except Southwest). If you're buying airline stocks, ensure the company has a management team you believe in.

Airline Stocks: An Overview

Airline stocks represent investments in companies operating within the aviation industry, which includes commercial airlines, cargo carriers and related service providers. These stocks allow investors to participate in the financial performance and growth of airlines, an industry that plays a vital role in global transportation.

Investing in airline stocks involves understanding the dynamics of the aviation sector and considering factors that influence the performance of individual companies. Various factors, including fuel prices, passenger demand, operational efficiency, competition and overall economic conditions, influence the profitability of airline stocks.

Historically, airline stocks have been known for their volatility, often experiencing significant fluctuations due to external factors such as fuel price volatility, geopolitical events and global health crises. However, airline stocks have also shown the potential for profitability and long-term growth as the industry has evolved and adapted to changing market conditions.

The COVID-19 pandemic severely impacted the airline industry, leading to widespread disruptions, reduced travel demand and financial challenges for many companies. As a result, airline stocks experienced significant declines in value. However, with the gradual recovery and reopening of the global economy, the outlook for the industry has improved, and investors are again eyeing airline stocks as potential investment opportunities.

Features to Look for in Airline Stocks

Consider several key features and factors when evaluating airline stocks for investment. These features can provide valuable insights into a particular airline stock's financial health, growth potential and overall investment appeal. Let's review the features you should look for when evaluating an airline stock for investment. 

Financial Performance

Assess the company's revenue and earnings growth over time. Look for consistent profitability and a track record of positive financial results. Consider factors such as operating margins, return on investment and debt levels. Suppose a passive income stream via dividend payments is part of your dividend investment strategy. In that case, you will want to review the company's dividend payment history and dividend payment dates to ensure they fit into your strategy. 

Market Share and Competitive Advantage

Analyze the airline's market position and its ability to compete effectively. Consider factors such as market share, route networks and partnerships that provide a competitive edge. Strong market presence and strategic advantages can contribute to long-term success.

Passenger Demand and Load Factors

Examine trends in passenger demand, load factors (percentage of seats filled on flights) and passenger traffic growth. Higher demand and consistently high load factors indicate healthy airline service demand.

Cost Management

Evaluate the company's ability to manage costs efficiently. Efficient fuel management, labor cost control and operational optimization can increase profitability. Airlines with effective cost management strategies are better positioned to weather industry challenges.

Fleet Composition and Modernization

Assess the age and composition of the airline's fleet. A modern and fuel-efficient fleet can lead to cost savings and environmental sustainability. Additionally, consider factors such as fleet expansion plans and orders for new aircraft to gauge the company's growth potential.

Ancillary Revenue Streams

Consider the airline's ability to generate revenue from ancillary services such as baggage fees, in-flight services and loyalty programs. Diversification of revenue sources can enhance profitability and mitigate risks associated with fluctuations in ticket prices.

Regulatory Environment

Understand the regulatory landscape that impacts the airline industry, including government policies, safety regulations and air traffic control systems. Stay informed about potential regulatory changes that could affect the company's operations. 

Industry Trends and Macroeconomic Factors

Stay updated on industry trends, such as emerging markets, changing travel patterns and technological advancements. Additionally, consider macroeconomic factors like fuel prices, currency exchange rates and overall economic conditions that may impact the airline industry.

Risk Factors

Evaluate potential risks and challenges specific to the airline, such as geopolitical events, natural disasters, labor disputes and unexpected disruptions. Assess the company's risk management strategies and ability to mitigate such risks.

Investor Sentiment and Analyst Recommendations

Consider market sentiment and analyst recommendations regarding the airline stock. Monitor analyst reports, read earnings transcripts, and look for ratings and target prices to gauge the broader perception of the stock's potential. Investors may also want to track the airline sector by following indexes like the Nasdaq Airline Index.

Investors can make more informed decisions when selecting airline stocks by carefully considering these features and conducting thorough research and analysis. It is important to remember that investing in the stock market carries risks which we will cover in-depth later in the article. 

10 Best Airline Stocks

Now that we have reviewed the various features and factors that define the investment potential of airline stocks let's use that information to evaluate the top ten airline stocks that have emerged as compelling choices for investors seeking growth and stability.

Our selection process has identified various airline stocks, encompassing renowned industry giants and promising up-and-coming players. These stocks offer exposure to different segments of the airline industry, providing investors with opportunities for both short-term gains and long-term capital appreciation. By carefully evaluating and comparing airline stocks, investors can make more informed investment decisions and potentially capitalize on the opportunities presented by the aviation sector.

Delta Air Lines 

Delta Air Lines (NYSE: DAL) has consistently demonstrated remarkable financial performance, positioning itself as one of the most profitable airlines in the industry. With substantial revenue of $50.5 billion and a net income of $1.32 billion in 2022, the company maintains a strong balance sheet with a debt-to-equity ratio of 3.17. 

Investors will want to keep track of the company's debt as changes to interest rates could impact the company's profitability. Delta Air Lines has achieved a dominant market share, holding approximately 20% of the domestic market and boasting a robust international network. This blue-chip company has a competitive advantage in its extensive route network, strong brand reputation and efficient operations. 

Delta Air Lines also witnessed strong passenger demand, carrying 177 million passengers in 2022 with an impressive load factor of 83%. The company has implemented effective cost management strategies, resulting in a decrease of 2.5% in cost per available seat mile (CASM) in 2022. With one of the youngest fleets in the industry, Delta Air Lines continuously focuses on fleet modernization, investing in new aircraft such as the Airbus A321neo and Boeing 787 Dreamliner. The airline generates significant ancillary revenue of $10.8 billion, accounting for 22% of its total revenue in 2022. Delta Air Lines navigates the regulatory environment adeptly and stays attuned to industry trends and macroeconomic factors to mitigate risks. Delta Air Lines' financial performance, market leadership and strategic initiatives have earned positive investor sentiment and favorable analyst recommendations.

Southwest Airlines 

Southwest Airlines (NYSE: LUV) is a prominent player in the airline industry, recognized for its strong financial performance. The company has consistently demonstrated resilience and profitability, providing investors with confidence. Southwest Airlines has established a competitive advantage through its low-cost business model, focusing on operational efficiency and cost management. The airline has a solid market share and has successfully expanded its route network, serving numerous destinations across the United States. Southwest Airlines has experienced robust passenger demand, carrying many travelers. The company maintains high load factors, reflecting its ability to fill seats on its flights efficiently. 

Cost management remains a priority for Southwest Airlines, allowing the company to maintain competitive fares and sustainable profitability. The airline's fleet composition and modernization efforts contribute to operational efficiency and customer satisfaction. Ancillary revenue streams, such as baggage fees and other services, further bolster Southwest Airlines' financial performance. The company operates in a regulatory environment focusing on safety and compliance. Southwest Airlines strives to navigate potential risks and capitalize on opportunities by closely monitoring industry trends and macroeconomic factors. Southwest Airlines' social media sentiment is positive, as is investor sentiment. The company also has favorable analyst recommendations, reflecting confidence in its performance and strategic direction. The Southwest Airlines stock price has been incredibly volatile over the last several years providing multiple entry points for investors. 

United Airlines 

United Airlines (NYSE: UAL) is the second-largest airline in the United States, with a 19% market share, offering extensive domestic and international connectivity. The company has demonstrated strong financial performance, reporting revenue of $44.9 billion and a net income of $737 million in 2022. The United Airlines earnings reports have been favorable for the past several quarters. The company maintains a healthy balance sheet with a debt-to-equity ratio of 4.13. Leveraging its extensive network, strong brand and efficient operations, the airline enjoys competitive advantages in the industry. Passenger demand remains robust, with a significant increase of 18% in the number of passengers in 2022. 

United Airlines effectively manages costs, reducing costs per available seat mile (CASM) by 2.3% in 2022. The airline maintains a young fleet, investing in newer fuel-efficient aircraft like the Boeing 787 Dreamliner and Airbus A350 XWB. Ancillary revenue streams, such as baggage fees and seat assignments, contribute significantly to United Airlines' revenue. The company navigates the regulatory environment effectively and remains attuned to industry trends and macroeconomic factors. While facing risks like economic downturns and increased competition, United Airlines has a positive investor sentiment.

Alaska Air Group 

Alaska Air Group (NYSE: ALK) is a highly profitable airline with a solid financial performance. It holds a 6% market share as the fifth-largest airline in the United States. The company demonstrates robust passenger demand and achieves a high load factor of 83%. Alaska Air Group excels in cost management. It generates significant ancillary revenue and enjoys positive investor sentiment. Alaska Airlines institutional investors make up a large portion of the company's stockholders, bringing stability and confidence to the stock. These institutional investors, such as mutual funds, pension funds, and other financial institutions, typically conduct thorough research and analysis before making investment decisions. 

Their significant holdings in Alaska Airlines indicate a positive outlook on the company's prospects and financial performance. The presence of institutional investors can also attract additional investors who follow their lead or seek opportunities in well-supported stocks. Alaska Airlines' strong institutional investor base contributes to its market credibility and can influence market sentiment and trading activity.

JetBlue Airways 

JetBlue Airways (NASDAQ: JBLU) is a highly profitable airline with strong financial performance and a solid balance sheet. The company holds a 5% market share as the eighth-largest airline in the United States, benefiting from a robust network of domestic flights. JetBlue Airways has demonstrated strong passenger demand and achieved a high load factor of 82%. It effectively manages costs, boasts a relatively new fleet of aircraft and generates significant revenue from ancillary sources. Social media sentiment towards JetBlue Airways is positive, making it an appealing investment option. 

Spirit Airlines 

Spirit Airlines (NASDAQ: SAVE) is a top choice among airline stocks due to its stored profit potential. With reported revenue of $1.35 billion and a net loss of $104 million in 2022, Spirit Airlines stands out as one of the most potentially profitable airlines in recent years. As the ninth-largest airline in the U.S., it holds a 4% domestic market share and offers a strong network of domestic flights. The company's focus on efficiency, low fares and unique product offerings contribute to its competitive advantage. 

Strong passenger demand, carrying 39 million passengers with an 81% load factor in 2022, reflects its popularity. Successful cost management, decreasing the cost per available seat mile by approximately 2% in 2022, ensures future profitability. Spirit Airlines is dedicated to renewing its fleet and has invested in fuel-efficient aircraft like the Airbus A321neo. Ancillary revenue streams, generating $640 million in 2022, add to its financial strength. Spirit Airlines has had its stock value destroyed by adverse news reports and negative investor sentiment as multiple attempts to purchase or merge with Spirit Airlines have either failed or are currently in negotiation. Monitor Spirit Airlines' headlines for news about these mergers and acquisitions to stay on top of any changes in Spirit Airlines' future dealings. 

American Airlines 

American Airlines (NASDAQ: AAL) stands out as a leading airline with unique strengths that position it on our list of top airline stocks. With a dominant 20% market share in the United States, American Airlines boasts the most extensive domestic network, supported by a strong brand and efficient operations. The company is considered a blue chip stock indicating its reputation for stability, reliability and strong performance. American Airlines' financial performance and American Airlines stock price are notable, with consistent profitability and a robust cash flow of $178 million in 2022. American Airlines excels in managing costs, as evident from a 2.5% reduction in cost per available seat mile (CASM) in 2022. The airline's fleet composition is another advantage, featuring one of the youngest fleets in the industry, averaging just 11.5 years. This modern fleet is complemented by strategic investments in fuel-efficient aircraft, such as the Airbus A321neo and Boeing 787 Dreamliner, contributing to lower maintenance costs.

Moreover, American Airlines effectively leverages ancillary revenue streams, generating substantial revenue of $11.1 billion from baggage fees and seat assignments. This demonstrates the airline's ability to capitalize on its strong brand and loyal customer base. 

Hawaiian Airlines 

Hawaiian Airlines (NYSE: HA) stands out among our top ten airline stocks for several compelling reasons. As the largest airline in the Hawaiian market, it commands a dominant 70% share, bolstered by a strong brand, exceptional customer service and unique offerings like free Wi-Fi and live TV. Despite recent challenges, the company has showcased resilience and potential for future growth.

With consistently strong passenger demand, carrying 20 million passengers in 2022 and an impressive 82% load factor, Hawaiian Airlines demonstrates efficient capacity utilization. Cost management initiatives have been successful, evident in a 2.1% decrease in cost per available seat mile (CASM) in 2022, supported by fuel hedging, fleet modernization and productivity improvements. Moreover, the airline's modern fleet, with an average age of 10.7 years and investments in fuel-efficient aircraft like the Airbus A321neo enhances operational efficiency and reduces maintenance costs.

Hawaiian Airlines generates significant ancillary revenue, accounting for 36% of its total revenue in 2022, through sources such as baggage fees and seat assignments. Despite the heavily regulated airline industry, the company has a positive relationship with the government, allowing it to navigate the regulatory environment effectively. While the industry faces economic downturns, rising fuel prices and increased competition, Hawaiian Airlines benefits from its strong financial position, loyal customer base and strategic market presence. These factors, coupled with positive investor sentiment and Hawaiian Airlines analyst recommendations, position it as an attractive investment opportunity within the airline sector.

International Consolidated Airlines Group ADR 

International Consolidated Airlines Group ADR (OTCMKTS: ICAGY) is a top pick among our top 10 airline stocks due to its noteworthy attributes. With consistent profitability over the past five years, the company reported a substantial net income of $23.07 billion in 2022, showcasing its financial strength. As the world's largest international airline group by revenue, the company operates a vast fleet and serves over 200 destinations globally, solidifying its market dominance. International Consolidated Airlines Group's robust competitive advantages include an extensive global network, strong brand recognition and impressive financial performance. 

International Consolidated Airlines Group has experienced strong passenger demand, consistently achieving a load factor above 80% for the past five years, bolstering its revenue growth. Moreover, the company excels in cost management through fuel hedging, productivity enhancements and fleet rationalization, enabling it to maintain profitability despite rising fuel costs. With a relatively young fleet averaging ten years, the company leverages reduced operating costs and improved environmental performance.

Generating significant revenue from ancillary sources such as cargo handling, passenger services and aircraft leasing, International Consolidated Airlines Group diversifies its income streams to mitigate the volatility of the air travel market. International Consolidated Airlines Group ADR earnings reports have also been favorable for several quarters. 

Frontier Airlines 

Frontier Group Holdings Inc (NASDAQ: ULCC) earns its spot on our list of top airline stocks due to its exceptional financial performance, market leadership and cost-effective operations. The company demonstrates strong profitability and growth with a net income of $3.33 billion in 2022 and a 20% CAGR in revenue over the past three years. Frontier Group Holdings Inc. operates over 100 aircraft and serves 100+ domestic destinations.

Frontier Group Holdings Inc. stands out for its low fares, solid customer base and effective cost management. With consistently high load factors above 80%, the company exhibits robust passenger demand and revenue growth. Its young and modern fleet, with an average age of 5 years, contributes to operational efficiency and environmental performance.

Furthermore, Frontier Group Holdings Inc. generates significant ancillary revenue from services like checked bags and seat assignments, providing a stable income stream. Despite operating in a regulated environment, Frontier Group Holdings Inc. has successfully complied with safety, security and environmental regulations while managing costs and complexity.

Although risks exist, including economic downturns, fuel price fluctuations, regulatory changes and increased competition, Frontier Group Holdings investor sentiment is favorable with a moderate buy recommendation. Frontier Group Holdings Inc's exceptional performance and strategic positioning make it attractive for investors seeking promising airline stocks.

Pros and Cons of Airline Stocks 

Investing in airline stocks can offer enticing opportunities for investors looking to tap into the travel industry. However, weighing the potential benefits against the inherent risks is essential, as with any investment. Let's explore the pros and cons of investing in airline stocks, providing a comprehensive overview to help investors make informed decisions. Whether you are considering adding airline stocks to your portfolio or seeking a deeper understanding of the industry, this analysis will equip you with valuable insights for your investment journey.

Pros

The benefits of investing in airline stocks may include:

• Strong growth potential: The global air travel market is expected to grow at a CAGR of 4.7% from 2022 to 2032, driven by various factors such as rising incomes, urbanization and e-commerce. Finding potential growth stocks within the airline sector could lead investors to healthy returns. 
• Dividends: Many airline stocks offer dividends, providing investors with a regular income stream. If a regular passive income stream is part of your investing strategy, you will want to research dividend stocks thoroughly before investing. 
• Low correlation to the stock market: Airline stocks often exhibit a low correlation to the broader stock market, offering potential diversification benefits to investors.
• Potential for capital appreciation: As the airline industry grows and companies improve their financial performance, there is the potential for capital appreciation of airline stocks.
• Improving cost management: Airlines are implementing cost-saving initiatives, such as fuel hedging and productivity improvements, which can positively impact their profitability.
• Technological advancements: Adopting advanced technology, such as more fuel-efficient aircraft and digital solutions, can enhance operational efficiency and reduce airline costs. Other technological advancements, such as booking platforms, management systems, and customer service tools, contribute to improved overall performance. Additionally, airlines that effectively leverage data analytics and artificial intelligence can gain valuable insights into customer preferences, optimize routes, and enhance revenue management. Embracing innovative technologies streamlines operations and enhances the passenger experience, leading to increased customer satisfaction and loyalty. As the industry evolves, investors should research new technologies and the companies that develop them in search of potential new technology companies in which to invest. 

Cons 

The downsides may include: 

• High volatility: Airline stocks are susceptible to significant price fluctuations due to factors like fuel price volatility, economic conditions and geopolitical events.
• High operating costs: The airline industry is characterized by high costs, including fuel expenses, maintenance, labor and regulatory compliance, which can impact profitability.
• Intense competition: The airline industry is highly competitive, with airlines constantly vying for customers through price competition and service differentiation, making it challenging to maintain profitability.
• Economic sensitivity: Airline stocks are influenced by macroeconomic factors, such as economic downturns, recessions and fluctuations in consumer spending, which can impact air travel demand. Air travel is considered a consumer discretionary cost, and in times of economic downturns, many consumers will opt for cheaper modes of travel. 
• Regulatory challenges: Airlines operate in a heavily regulated environment, facing compliance requirements related to safety, security, environmental protection and labor regulations, which can add complexity and costs.
• External risks: Airlines are exposed to external dangers beyond their control, including natural disasters, political instability, terrorist attacks, epidemics and other unexpected events that can disrupt operations and negatively affect financial performance.

It's essential for investors to thoroughly evaluate these pros and cons, considering their risk tolerance, investment goals and overall market conditions, before making investment decisions in airline stocks. 

Airline ETFs

If you don't want to research individual companies, you can buy a big chunk of the sector through airline ETFs. Some ETFs are broadly invested in the entire travel sector, which includes hotels, restaurants and other forms of transportation. The only available ETF with a clear focus on airlines is the U.S. Global Jets ETF (NYSE: JETS).

The Jets ETF only has $2 billion in assets, but it's the only way to get pure exposure to a broad selection of airlines without including other travel and transportation stocks. JETS offers exposure to the big three U.S. airlines, plus various regional and low-cost carriers. You'll also get exposure to Canadian airlines trading over the counter in the U.S., such as Air Canada and Bombardier Inc.

If you're willing to expand to the larger transportation sector, other ETF options come into play. The largest is the iShares U.S. Transportation ETF (BATS: IYT), which holds airlines along with railroad companies, delivery services, rideshare and trucking companies. Other transportation ETFs include the SDPR S&P Transportation ETF (NYSE: XTN) and the U.S. Sea to Sky Cargo ETF (NYSE: SEA).

Wait for the Right Market Conditions

The airlines aren't for impatient investors, and you may want to consider other transportation stocks investing. Over the last few years, the industry has been dragged through the proverbial muck. Profitability should return in 2023, although a recession later in the year could keep these stocks grounded. 

When looking for airline stocks to invest in, it's important to remember the business layout. Government regulators are always looming over the industry, capital expenditures are high and inflated fuel prices can hinder the entire sector. Risk isn't the only thing to manage when investing in airline stocks — you'll also need to keep your expectations in line.

The best airline stock will vary depending on the time frame and goals of the investor. Airlines have been tricky investments for several years now; even Warren Buffett got tired of trying to figure them out. The definition of "best airline stock" always depends on the individual considering the investment.

Airline stocks can be a tricky sector to invest in since these companies are heavily regulated, and fuel costs vary with commodity prices, which can be unpredictable. Airlines do well in good economies but suffer during recessions when consumers cut back on significant expenses like travel.