Recently, I’ve been researching investment opportunities in aircraft stocks and found that this sector really does have something interesting to it. After the pandemic, global travel demand rebounded quickly. According to forecasts from the International Air Transport Association, this year the number of global passengers has already surpassed pre-pandemic levels, and it is expected that by 2040, air travel demand will grow to double again—this is quite beneficial for airlines’ profit margins.

Why is it worth paying attention to aircraft stocks now? Mainly because this type of stock has clearly cyclical characteristics. When the economy recovers and travel demand is strong, airline profits rebound quickly, and stock prices usually rise along with them. In addition, modern airlines’ revenue sources have already diversified; they don’t rely only on ticket sales. They also earn non-ticket income such as baggage fees, seat upgrades, mileage programs, and cargo, which makes their financial structure much more stable than one might imagine.

In the U.S. stock market, Delta Air Lines (DAL), Panama Airlines (CPA), and Ryanair (RYAAY) are all options worth watching. As a top global airline operator, Delta has a high proportion of business travelers and also does a good job controlling fuel costs. Panama Airlines benefits from rising disposable income in Latin America, with steady performance and strong financial flexibility. As the leading European low-cost carrier, Ryanair leads the industry in operational efficiency. Its fleet exceeds 640 aircraft, and it transports more than 200 million passengers every year.

In Taiwan’s listed airline stocks, EVA Air, China Airlines, and Starlux Airlines each have their own features. EVA Air is one of Taiwan’s two major carriers and has Skytrax five-star certification, with international route capacity increasing significantly year over year. China Airlines has a long history, and its load factor has been improving steadily; the expansion of long-haul routes creates room for valuation recovery. Starlux Airlines is an emerging full-service airline with a young fleet, and its differentiated services attract many travelers.

However, investing in aircraft stocks also requires recognizing the risks. The airline industry has a high cost structure: fuel costs, labor costs, and fleet maintenance are the three biggest cost items. As long as oil prices rise or labor shortages occur, performance is immediately squeezed. In addition, airlines generally have high debt ratios. Once the business cycle turns around or interest rates rise, financial pressure will be substantial. On top of that, this industry is especially prone to black swan events. Things like oil price spikes, geopolitical crises, and weather problems are hard to predict, but once they happen, they can lead to sharp stock price volatility.

In terms of strategy for investing in aircraft stocks, the best timing is when the economic cycle is close to its end, and when airlines are still earning most of their profits. Also, remember to diversify your investment portfolio across different regions to reduce the risk of any single market. Most importantly, choose airlines with abundant cash flow, because companies like these need large amounts of cash to get through industry downturns.

To be honest, although aircraft stocks can be quite volatile, against the backdrop of ongoing global travel demand recovery, if you seriously research fundamentals and do a good job of risk management, there are still many opportunities. Even investors like Buffett, who once had a skeptical attitude toward airline stocks, now have important stakes in companies such as Delta Air Lines, American Airlines, and United Airlines—enough to show that the market’s view of the outlook for aircraft stocks has already changed.