Is There A Pilot Shortage?

According to Holmes, the airline industry is very constrained by the limited number of pilots, which has resulted in 25 percent fewer flights departing from many cities as compared to 15 years ago.

The simple fact is there is a lack of qualified pilots to man the planes, and airliners have had to increase the age of retirement for their pilots from 60 to 65. If this was not done, then the airline industry as a whole would lose out on 18,000 flights per day. While this may sound concerning to passengers, pilots today are substantially healthier and able to continue working compared to 20 years ago when the mandatory retirement age was 60.

The Airline industry also can't afford to go out and hire tens of thousands of new pilots at competitive salary rates while simultaneously undercutting each other in price wars.

Holmes further noted that the airline industry is trading at just seven times earnings, as opposed to the trains and trucks sector, which is trading at 18 times earnings. As such, the fund manager and some investors are bullish on the sector.

Holmes also highlighted Southwest Airlines Co LUV as being a top pick among airline analysts and experts he spoke to.