Which airline shares should you invest in?

Traditionally a lot of investors, including legendary investor Warren Buffett, would avoid airline shares due to their volatility and reputation for being losing investments.

However, this year things have changed and even Warren Buffett has been investing in the industry. Are any of them still in the buy zone today?

The Alliance Aviation Services Ltd (ASX: AQZ) share price is up 78% so far this year. Alliance is an air charter operator and services various sectors including tourism, corporate, sporting, media, education, and the government. Last week Ord Minnett slapped a buy rating and $1.65 price target on its shares. In my opinion, this could make it worth a closer look.

The Qantas Airways Limited (ASX: QAN) share price has rallied over 89% higher since the turn of the year. Despite this strong run I think Qantas is still potentially a buy thanks to the benefits of low oil prices, excellent capacity management, and improvements in trading conditions. I’m not alone in this view either. Goldman Sachs recently gave Qantas a buy rating and increased the price target on its shares to $6.86.

The Regional Express Holdings Ltd (ASX: REX) share price is up almost 80% in 2017. It isn’t hard to see why the shares of the regional airline have been on a tear this year. In August Regional Express delivered a profit before tax of $17.8 million, compared to a $10.7 million loss in FY 2016. A 9% increase in passengers and a 12% decline in fuel costs were largely the catalysts for the swing to profit. While I would class it as a hold at the current price, it could still be worth a look.

The Virgin Australia Holdings Ltd (ASX: VAH) share price is the black sheep in the group and has fallen 22% this year. Unfortunately for its shareholders, the company has thus far been unable to capitalise on the positive industry trends. While it could arguably be a candidate for a turnaround investment, I’m not overly bullish that one is forthcoming. I would stay clear of the airline until there is a notable improvement in its performance.

Finally, if you're not convinced that airline shares are a buy, then take a look at these top growth shares instead.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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