An airline exchange-traded fund (ETF) can provide diversified exposure to the air travel industry, including aircraft manufacturers, airline operators, airports, and terminal services. The U.S. airline industry includes major carriers such as American Airlines Group Inc. (AAL), Delta Air Lines Inc. (DAL), and Southwest Airlines Co. (LUV).
Driven by a surge in leisure and business travel, the industry has seen a sharp rebound in demand from the lows during the pandemic. This has occurred as jet fuel prices have risen, boosting costs for carriers. The recovery, nonetheless, has been uneven. Throughout the summer, flight delays and cancellations have plagued the industry, as airlines cope with staffing concerns and other issues affecting logistics. For investors optimistic about the industry’s long-term recovery, an airline ETF provides a way to get broad-based exposure to that trend.
Key Takeaways
- Airline stocks have underperformed the broader market over the past year.
- The best (and only) airline ETF is JETS.
- The fund’s top holdings are American Airlines Group Inc., Southwest Airlines Co., and Delta Air Lines Inc.
There is only a single option when it comes to ETFs focused on the airline industry: the U.S. Global Jets ETF (JETS). The airline industry has underperformed compared to the S&P 500 in the past year. The benchmark S&P 500 Airlines Industry Index has provided a total return of -21.0% compared to the S&P 500’s -3.7% return, as of Aug. 10, 2022. Note that this index includes only U.S. companies and is not a perfect metric for JETS, which has a global focus. All of the data below are as of Aug. 11, 2022.
- Performance Over One Year: -20.3%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.04%
- Three-Month Average Daily Volume: 5,520,150
- Assets Under Management: $2.7 billion
- Inception Date: April 28, 2015
- Issuer: U.S. Global Investors
JETS is the only pure play airline ETF. As of June 30, 2022, the date of its most recent fact sheet, this fund allocates roughly 74.5% of its portfolio to airlines and companies involved in the aviation industry (aircraft manufacturers, terminal services companies, and airports), with just under 25% invested in companies involved in transportation infrastructure, internet, transportation, and commercial services. Just over three quarters of the fund’s holdings are securities domiciled in the U.S., with smaller allocations to companies in Europe, Asia, and Latin America.
Although JETS is a multi-cap ETF, it is weighted predominantly toward large-cap and mid-cap companies—small-cap companies make up just 4.3% of the portfolio. Overall, its investment strategy is to track the U.S. Global Jets Index, although the fund doesn’t guarantee 100% replication and may invest in securities not included in the index. Below, we look at the top 10 holdings for this fund.
| Top JETS Holdings | ||
|---|---|---|
| Company Name (Ticker) | Percentage of JETS Assets | Description of Company |
| American Airlines Group Inc. (AAL) | 9.7% | Domestic and international carrier |
| Southwest Airlines Co. (LUV) | 9.4% | Low-cost carrier |
| Delta Air Lines Inc. (DAL) | 9.2% | Domestic and international carrier |
| United Airlines Holdings Inc. (UAL) | 9.0% | Domestic and international carrier |
| Frontier Group Holdings Inc. (ULCC) | 4.4% | Low-cost carrier |
| Spirit Airlines Inc. (SAVE) | 3.5% | Low-cost carrier |
| Alaska Air Group Inc. (ALK) | 3.1% | Domestic airline |
| Hawaiian Holdings Inc. (HA) | 3.0% | Low-cost carrier |
| Skywest Inc. (SKYW) | 2.8% | Regional airline |
| Air Canada (AC.TO) | 2.7% | Canada-based domestic and international airline |
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