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Is it the right time to buy airline stocks?

The airlines industry is poised for strong growth in the near future. In the recently concluded third quarter of 2014, most airlines companies posted solid numbers despite the Ebola outbreak and unfavorable economic conditions. Improved momentum on the freight side and the downtrend in oil prices coupled with increased demand for passenger traffic provide the tailwind for the industry.

As per the World Tourism Organization (UNWTO), in the first eight months of 2014, foreign tourist arrivals rose 5% globally as compared with the same period in 2013. For full-year 2014, they are expected to grow between 4% and 4% annually. This is likely to act as a long-term positive for the airline industry.

In addition, the industry is gearing up to counter the widespread occurrence of infectious diseases like Ebola, SARS and Avian Flu which may significantly hamper travel plans. In keeping with this, International Air Transport Association (IATA) recently rolled out an Emergency Response Plan and Action Checklist which aim at limiting the spread of such diseases.

We discuss a few factors of the airlines sector that investors should consider and look forward to in the coming months:

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