Airlines Sector Heating Up: Is AIRL the New Play?

Themes just dropped a fresh airlines-focused ETF (AIRL), and it’s worth paying attention to. Here’s why the timing matters.

What You’re Actually Getting

AIRL tracks the Solactive Airlines Index—basically the 30 largest carriers by market cap stuffed into one fund. The lineup reads like a who’s-who: Ryanair (5.02%), Lufthansa (4.98%), and EasyJet (4.94%) make up nearly 15% of the portfolio. Heavy Europe bias too (UK and Germany dominate), though US exposure sits at 37.1%.

Fee-wise? 35 bps. That’s half the expense ratio of the category average, and 25 bps cheaper than the only other pure-play airlines ETF (JETS), which charges 60 bps. Not game-changing, but worth noting for the fee-conscious.

Why Now?

The tailwinds are real. IATA is projecting airlines will pull in $25.7 billion net profit in 2024—up from $23.3 billion this year. That’s a 2.7% profit margin, modest but solid. Here’s the kicker: international travel is expected to grow over 25% by 2027 versus pre-pandemic levels.

The numbers get bigger when you zoom out. Total airline revenues are forecast to hit $964 billion in 2024, a historic high. Passenger numbers? About 4.7 billion—exceeding the pre-pandemic peak of 4.5 billion in 2019. European travel giant Tui’s betting on a 25% jump in EBIT next year, so management confidence is there.

The Real Competition

AIRL isn’t alone in the ring. JETS (the OG airlines-only ETF) has $1.79 billion under management. Then there’s the broader transportation play via SPDR S&P Transportation ETF (XTN) and iShares U.S. Transportation ETF (IYT)—both hold airline exposure but cast a wider net.

Bottom line: If you’re bullish on travel rebounds and want pure airlines exposure without the 60 bps drag, AIRL’s cheaper entry point could matter for long-term investors. But the sector’s only as strong as consumer spending holds up.