ETF investors who are looking into the airline industry may find that airline carriers’ business models have evolved over the years as airliners try to find new revenue streams.
“There’s been quite a bit of change over the past ten years. Traditionally, the airlines most of the revenue is made from ticket charges – you pay for your ticket to get on the flight. Well now what they have is these ancillary fees – meaning the small items you can purchase on the plane, when you go to change reservations, the fees, and it’s actually been a boon for the airline industry,” Michael Matousek, Head Trader at U.S. Global Investors, said at Inside ETFs.
“With all those fees, it’s actually acquired about $92 billion globally for the airlines,” Matousek added.
As a stronger middle-income consumer base contributes to rising discretionary spending globally and fuel a potential growth opportunity in the transportation segment, investors can look to something like the U.S. Global Jets ETF (NYSEArca: JETS), the lone ETF dedicated to airline stocks, to access the growth opportunity.
JETS follows the U.S. Global Jets Index, which uses fundamental screens to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers and airport companies.
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JETS is not a pure play on airlines as it is slightly diversified into aircraft manufacturers and airports & terminal services or infrastructure. The ETF also includes global exposure to North and South Americas, Europe, Asia and Australia.
The fund’s top holdings include many prominent names like Delta Airlines 13.6%, American Airlines Group 12.1%, United Continental 11.7%, Southwest Airlines 11.6% and Skywest 4.4%, among others.
Watch the full interview between ETF Trends CEO Tom Lydon and Matousek:
For more ETF-related commentary from Tom Lydon and other industry experts, visit our video category.