I’ve been keeping an eye on airline and travel stocks lately and found this sector to be genuinely interesting. Many people ask me whether it’s worth entering by the end of 2025. To be honest, looking back now, airline stocks’ performance has been more resilient than many people expected.

First, let’s talk about the basic logic behind airline stocks. Airlines can be divided into two types: one is state-backed, with stable internal structure—such as EVA Air—so investors generally feel more at ease; the other is privately run airlines, where ownership structures are easier to change, but there is also more room for growth. Each type has its own way of playing.

The three most core factors that affect the stock prices of airline and travel companies are actually: the global economic situation, oil price trends, and interest-rate levels. When the economy is doing well, people travel abroad more, airlines’ load factors rise, and profits improve. Soaring oil prices directly squeeze profit margins—this is what airlines fear the most. When interest rates are high, financing costs go up, which can have a major impact on these capital-intensive companies.

Looking at the U.S. market, Delta Air Lines (DAL), Ryanair (RYAAY), and Copa Airlines (CPA) are all worth paying attention to. Delta Air Lines is a top-tier global operator, and it’s performed well this year. Although it has had short-term fluctuations, its long-term potential is significant. Ryanair is Europe’s low-cost leader, having ordered 300 new aircraft, with very ambitious expansion plans. Copa Airlines is the leading airline in the Latin America region; its financial figures are quite impressive, and its on-time performance and operational efficiency are excellent.

Airline and travel stocks in Taiwan are also doing well. EVA Air is one of Taiwan’s two dual leaders. It has received Skytrax five-star certification, with a load factor over 92%, and it is actively expanding international routes. China Airlines has a long history and operates both passenger and cargo services, and in the third quarter its load factor also reached around 87%. Starlux Airlines is an emerging growth stock; although its valuation is relatively high, its growth potential is clearly evident, and it is expanding both domestic and international routes.

To be frank, airline stocks are classic cyclical stocks. When conditions are good, they can rise fast; when conditions are bad, they can also fall very badly. The advantage is that travel demand tends to be very flexible during recovery, and large airlines do have real advantages in their respective markets. The downside is that their cost structure is rigid—fuel, labor, and maintenance costs are all high, making it difficult to cut costs when the industry is in a downturn. In addition, their debt ratios are generally higher; once the cycle reverses or interest rates rise, the financial pressure can become very significant.

I think there are a few things to pay attention to when investing in airline and travel stocks. First, catch the economic cycle—ideally enter early in the recovery phase. Second, diversify your investments, because airline stock risk characteristics differ across regions. Third, choose companies with sufficient cash flow so they can make it through the industry downturn.

According to IATA’s estimates, in 2025 the number of global passengers has already surpassed pre-pandemic levels, and in the next decade the demand for airline travel is expected to double—this is positive for the entire industry. Even Warren Buffett has started to show interest in U.S. airline stocks, and analysts on Wall Street have been upgrading their ratings one after another. So from a long-term perspective, airline and travel stocks do have opportunities, but you need to do a good job of risk management—don’t be scared off by short-term volatility.