Recently, while researching airline stocks, I found that this sector is actually worth taking a closer look.

Airline stocks, put simply, are the shares of publicly listed airlines. They are divided into two types: state-owned and private. State-owned carriers such as EVA Air have a stable internal structure and are suitable for people seeking steady returns. Private carriers such as Spring Airlines and Southwest Airlines in the U.S. have more frequent changes in ownership, and therefore greater volatility.

Why have I been paying attention to airline stocks lately? Mainly because of several factors. First, the global economic recovery has boosted travel demand, and after the pandemic this sector rebounded particularly quickly. Second, oil prices have been relatively stable, which helps ease cost pressure on airlines. In addition, the interest rate environment matters: when interest rates are low, airlines face less financing pressure and have stronger momentum to expand.

I took a look at several airline stocks in the U.S. Delta Air Lines (DAL) performed well this year, with its share price rising by over 69%. Although there has been a pullback in the short term, the long-term potential remains. Copa Holdings (CPA), a leading airline in Latin America, has impressive financial figures, a punctuality rate of 91.5%, and continuously improving operational efficiency. Ryanair (RYAAY), as Europe’s low-cost leader, has a fleet of more than 640 aircraft and carries more than 200 million passengers annually—there are very few companies in Europe that can match this scale.

Airline stocks in Taiwan are also doing well. EVA Air is Taiwan’s leading airline, with a passenger load factor of 92.5%. Its international route capacity has increased significantly, and newly introduced Boeing 787 aircraft are being put into service on multiple routes. China Airlines, another major carrier, has a passenger load factor of 86.9% and is also actively expanding long-haul routes. Starlux Airlines, although established more recently, has a young fleet and provides strong differentiated services. Its share price rose by 18% last year, so it can be considered a growth stock.

What’s the logic behind investing in airline stocks? First, airlines have a certain degree of monopoly characteristics—large carriers have clear advantages in their respective hub markets. Second, modern airlines diversify their revenue streams. They don’t rely only on selling tickets; they also earn from baggage fees, seat upgrades, mileage programs, cargo, and more, which makes their profit structure more stable. Some airlines may also pay dividends during periods of steady business conditions, which is attractive to cash-flow investors.

But risks also need to be recognized. Airline stocks are typical cyclical stocks, with a high cost structure. Fuel costs, labor costs, and fleet maintenance are major components. Once the business cycle turns worse, it becomes difficult to reduce costs. In addition, airlines generally have high debt ratios and make huge investments in fleets and facilities. If the cycle reverses, cash-flow pressure can become very significant. Moreover, this industry is especially vulnerable to black swan events. Oil price surges, geopolitical crises, and weather problems can all cause sharp declines in stock prices.

So how should you invest? The most direct approach is to open an account with a brokerage and buy airline stocks. If you buy Taiwan stocks, you can trade directly through domestic brokers. For U.S. and Hong Kong stocks, you may consider overseas brokers or delegated trading. Some people also use Contracts for Difference (CFDs). The advantages are that you can go long or short, there are no commission fees, and leverage is available—but the risks are also higher. This is suitable for experienced, high-risk investors.

As for timing, airline stocks follow the economic cycle. The best entry point is when the cycle is close to its end. During the economic expansion phase, airline profits are at their highest. But when the economy slows down, demand decreases. So you need to understand the direction of the economic cycle.

For your investment portfolio, diversification is recommended. Spread risk across airline stocks in different regions, and at the same time choose airlines with sufficient cash flow, so you can get through the industry’s long-term downturn period.

According to estimates from the International Air Transport Association, global passenger numbers in 2025 have officially surpassed pre-pandemic levels. By 2040, air travel demand is expected to double—from 4 billion to 8 billion passenger trips—with average annual growth of 3.4%. Even investors like Warren Buffett, who once held a skeptical view of airline stocks, now occupy important positions in Delta, American Airlines, and United Airlines. Wall Street analysts have also begun to recommend them. Morgan Stanley is bullish on Delta Air Lines, and it recently upgraded American Airlines to an overweight rating.

Overall, airline stocks do have opportunities amid the recovery of travel demand, but you need to do your homework: understand the cycle, manage risk, and choose companies with solid fundamentals. This airline industry recovery cycle is expected to continue, so it’s worth keeping an eye on.