Can you buy airline stocks? The complete guide to airline stock investing in 2026

Many people consider whether it’s a good time to buy airline stocks, often influenced by news of the industry’s rapid recovery after the pandemic. Indeed, airline stocks have shown remarkable rebounds in recent years, but behind that are logical factors investors need to understand. So, is it suitable for you to buy airline stocks? It depends on your understanding of industry characteristics, risk tolerance, and market timing.

Understanding Airline Stocks: From Classification to Market Structure

Airline stocks refer to shares issued by publicly listed airlines. Globally, airline stocks mainly fall into two categories: state-owned national carriers and private independent carriers.

State-owned airlines are led by government or policy institutions, with relatively stable internal structures. These companies tend to appeal to conservative investors. Examples in Hong Kong include China Eastern Airlines and China Southern Airlines, whose operations are closely tied to government policies. In contrast, private airlines are driven by private capital, offering greater operational flexibility but more frequent ownership changes. U.S. carriers like Southwest Airlines and United Airlines, as well as Chinese carriers like Spring Airlines and Juneyao Airlines, belong to this group.

Taiwan’s airline industry features a “dual oligopoly + new entrants” pattern. Evergreen Airlines and China Airlines are the two traditional giants controlling major routes, while StarLux Airlines represents a new generation of full-service carriers, with younger fleets and differentiated services opening new markets.

Five Key Factors Determining Whether to Buy Airline Stocks

Before investing in airline stocks, it’s crucial to understand the core variables driving industry performance, as these directly impact profitability.

Global economic cycles are the primary consideration. Demand for air travel is highly correlated with economic health. During recessions, consumers cut discretionary spending, with air tickets among the first to be reduced. The COVID-19 pandemic vividly demonstrated this—global economic shutdowns led to near-zero passenger numbers and the industry’s largest losses ever. Conversely, during economic expansions, travel demand surges, significantly improving airline profits.

Oil price fluctuations directly affect airline costs. Fuel typically accounts for 25-35% of operating expenses. A $10 per barrel increase in oil prices can add billions of dollars in annual losses industry-wide. When oil prices are high, airlines raise ticket prices to pass on costs, which can suppress demand. When oil prices fall, airlines may benefit from cost relief and sometimes lower fares to gain market share.

Interest rate environment profoundly influences airline financing costs. The industry is capital-intensive, with large investments in new aircraft, terminals, and maintenance facilities. When central banks raise interest rates, borrowing becomes more expensive, often constraining fleet expansion and upgrades. Conversely, low interest rates encourage investment in fleet renewal and network expansion.

Labor supply and negotiations are invisible cost drivers. Recently, pilot shortages in the U.S. have led to wage increases and union strikes, directly eroding profit margins.

Geopolitical and unexpected events are the most unpredictable yet impactful variables. Wars, terrorist attacks, airspace restrictions, and weather disasters can force airlines to reroute or reduce flights, damaging revenue.

Major U.S. Airlines: Analysis of the Big Three

The U.S. airline industry is characterized by oligopoly, with Delta Air Lines (DAL), American Airlines (AAL), and United Airlines (UAL) controlling most domestic and transatlantic capacity.

Delta Air Lines (DAL), headquartered in Atlanta, founded in 1924, has grown into a global giant covering six continents and over 1,000 destinations. Delta’s competitive advantages include a high proportion of business and international travelers—who pay higher fares and generate more profit—its own oil refinery for partial fuel hedging, and efficient maintenance and fleet management. Historically, Delta has shown more stable performance than peers. Wall Street analysts generally favor Delta, with Morgan Stanley naming it a top pick.

Copa Holdings (CPA), though smaller than the Big Three, plays a key role in Latin America. Centered in Panama City, Copa connects 32 countries and 78 destinations, with an average of 327 flights daily. Rising disposable income and urbanization in Latin America provide long-term growth drivers. Copa has delivered strong recent results, optimized operations, and has been recognized as the best airline in Central America and the Caribbean by Skytrax for multiple years.

Ryanair Holdings (RYAAY) is Europe’s largest airline group and a global low-cost leader. Known for its ultra-low-cost model, Ryanair operates over 640 aircraft, with 3,600 daily flights and 200 million annual passengers. The company continues expanding across Europe, with orders for 300 new planes aiming for 300 million passengers by 2034. Its low-cost structure offers resilience during downturns, though it mainly relies on short-haul leisure travel.

Taiwan’s Airline Stocks: Local Opportunities

Taiwan’s airline industry is highly concentrated, with Evergreen and China Airlines dominating the market, while StarLux represents a new growth force.

EVA Airways (2618), established in 1989, is one of Taiwan’s oldest international carriers, known for five-star service. Its fleet includes Boeing 787 Dreamliners and Airbus A350s, serving over 60 destinations across Asia, Europe, North America, and Oceania. EVA’s business model combines passenger and cargo operations, with plans to convert passenger aircraft into freighters by 2025 to diversify revenue. In Q3, passenger load factor reached 92.5%, with international capacity significantly increased, suggesting potential for stock appreciation.

China Airlines (2610), founded in 1959, is Taiwan’s oldest airline and part of the SkyTeam alliance. It operates a fleet of 83 aircraft with over 1,400 weekly flights. Compared to Evergreen, China Airlines has stronger domestic market control and rapid cargo growth. In Q3, passenger load factor was 86.9%, with double-digit growth in international capacity.

StarLux Airlines (2646), Taiwan’s youngest full-service carrier, launched operations in 2020. It emphasizes differentiated service and a young fleet, with rapid growth. In Q3, passenger load factor was 85.9%. Its new long-haul route from Taipei to California’s Ontario Airport has been well received. Future plans include ordering 10 Airbus A350-1000s at the Paris Air Show to expand international presence. As a growth stock, StarLux appeals to investors optimistic about Taiwan’s tourism and long-haul expansion.

Practical Strategies for Investing in Airline Stocks

There are various ways to invest in airline stocks, suited to different investment styles.

Traditional brokerage purchases are the most straightforward. Taiwanese investors can buy Taiwan-listed airline stocks through local brokers. For U.S. stocks, overseas brokers or domestic brokers’ cross-border services are options. Cross-border trading avoids opening separate accounts but may involve higher fees and slower execution.

CFD trading offers an alternative. Compared to traditional brokers, CFDs allow unlimited long and short positions, no trading commissions, and leverage. This is attractive for short-term traders or those with high risk tolerance. A 1% increase in stock price could translate into a 10% profit with leverage, but leverage also amplifies losses.

Regardless of the method, risk management is key. Beginners should start small, with low leverage, and gradually learn the volatility characteristics of airline stocks.

The Reality of Risks in Airline Stocks: When Not to Buy

Airline stocks are highly cyclical, experiencing clear good and bad years. Investors must honestly face these risks.

Rigid cost structures are a primary concern. Fuel, labor, and maintenance costs are difficult to adjust quickly. During downturns, flight capacity and load factors decline, but fixed costs remain, sharply reducing profit margins. This explains why airline stocks are most volatile during economic shifts.

High debt and cash flow pressures are another hidden risk. Airlines often carry significant debt for aircraft purchases and maintenance. During the pandemic, many U.S. airlines had to raise large amounts of capital, diluting shareholder value. Rising interest rates or worsening economic conditions can turn debt into a heavy burden.

Black swan events—like pandemics, geopolitical conflicts, terrorism, or extreme weather—can abruptly reduce capacity and demand, often with severe stock declines.

Intensified competition and fare wars also erode industry profitability. The rise of low-cost carriers forces traditional airlines to lower fares, compress margins industry-wide.

When is it not suitable to buy airline stocks? When signs of economic recession appear, consumers cut travel; geopolitical risks and rising oil prices escalate; airline debt levels are high and cash flows weak; or market valuations are overly optimistic. Wise investors tend to wait during these “risk-concentrated” periods.

Industry Recovery in 2026: Investment Logic and Timing

After incurring a historic loss of $140 billion during the pandemic, the airline industry has begun to turn profitable since 2023. The International Air Transport Association (IATA) estimates global passenger numbers are gradually surpassing pre-pandemic levels. By 2040, travel demand is projected to double from 4 billion to 8 billion passenger trips annually, with an average growth rate of about 3.4% over 15 years. This presents a structural growth opportunity.

Even Warren Buffett, known for caution, has shifted his view on airline stocks. Berkshire Hathaway has built significant holdings in Delta, American, and United, reflecting a renewed confidence in the industry’s prospects. Wall Street analysts are increasingly recommending airline stocks, with firms like Morgan Stanley raising target prices.

Timing your airline stock investments is crucial. Stocks follow economic cycles—profitable during expansions, vulnerable during recessions. The best entry point is near the cycle’s trough, when pessimism drives prices down. Buying at low valuations during downturns allows maximum upside during recovery. Conversely, buying when the industry is overheated and valuations are high carries greater risk.

Diversification across regions can reduce localized risks. European low-cost carriers and U.S. traditional airlines often have different cycles; Taiwan and emerging markets have distinct growth drivers. Spreading investments geographically helps balance risks.

Focusing on financially healthy airlines is another key criterion. Companies with strong cash reserves, manageable debt, and rational fleet expansion plans are better positioned to weather downturns.

Is It Okay to Buy Airline Stocks? Final Judgment

Returning to the initial question: Can you buy airline stocks? The answer depends on your investment horizon, risk appetite, and timing.

If you are a long-term investor comfortable with 30-50% short-term volatility, and believe in the long-term growth of global travel, then allocating some funds to airline stocks at reasonable valuations makes sense. Prioritize leading companies with solid cash flow, stable market positions, and modern fleets—these tend to have more manageable risks.

If you are a short-term trader or highly risk-averse, the volatility may be unsettling. In that case, it’s better to wait for more pessimistic market sentiment or use tools like CFDs with controlled leverage to participate.

In any case, understanding the cyclical nature, high costs, and sudden risks of airline stocks is essential. Investing is about strategic capital allocation, not gambling. When you thoroughly grasp the mechanisms, timing, and risks involved, you will naturally find your answer to whether airline stocks are suitable for your portfolio.