The Wall Street Journal (WSJ) has reported that Warren Buffett’s Berkshire Hathaway has taken a stake in three of North America’s largest commercial airlines.

Given Mr Buffett’s noted dislike for investing in airlines, could it be that he has changed his tune and now might be the perfect time to invest in an airline like Qantas Airways Limited (ASX: QAN), Air N.Z. FPO NZ (ASX: AIZ), Virgin Australia Holdings Ltd (ASX: VAH), Alliance Aviation Services Ltd (ASX: AQZ) or Regional Express Holdings Ltd (ASX: REX)?

The WSJ says Berkshire Hathaway has taken stakes of under US$500 million in each of American Airlines, Delta Air Lines and United Continental Holdings. Mr Buffett has also told CNBC that the company had also taken a stake in Southwest Airlines.

Mr Buffett has famously avoided airline stocks, regretting a decision to buy US$358 million worth of shares in US Air Group in 1989, despite selling that stake for a “hefty gain” in 1998. US Air went bankrupt in the decade after the sale. Twice.

In his 2007 letter to shareholders, he wrote,

The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favour by shooting Orville down.

“The airline industry’s demand for capital ever since that first flight has been insatiable. Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it.”

It’s likely that one of Mr Buffett’s lieutenants, Todd Combs or Ted Weschler, made the investment – as they have often shown a willingness to invest in sectors that Mr Buffett would avoid.

One of the persistent issues for airlines is that they compete, at least internationally, with several airlines that are backed by sovereign entities or governments (like Air NZ), and therefore the focus on profits and returns to shareholders is less of a priority. That means they can offer discounted pricing that would be unsustainable by any purely commercial-focused airlines.

One factor that is affecting airlines currently is the ultra-low prices for international fares. For around $1,000, Australians can buy return tickets to the US or Europe on several airlines.

That is offset somewhat by oil prices that recently hit three-month lows and are less than half their price a few years ago. That has seen the likes of Qantas pay $1.2 billion less in fuel costs in the 2016 financial year (FY2016) compared to FY2014.

Foolish takeaway

At the current share price of around $3.15, Qantas is trading on a trailing P/E of under 6x and expected to produce a similar result in FY2017 as the previous year. That looks cheap, but to me, the risks are just too high to justify. I’ll continue to avoid investing in airlines.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.