After two years of relatively empty skies, Ryanair CEO Michael O’Leary is an eyewitness to the incredible resurgence of air travel. Faced with long security delays at Dublin Airport, he implored the Irish government to summon the army earlier this year to help process eager travelers flooding the terminals.

As the global economy gradually emerges from the pandemic, airports around the world are dealing with a crush of passengers. Many are flying for the first time since COVID-19 crippled the travel industry. For the airlines, the turnaround has been fast and furious, surpassing even the most optimistic expectations. The surge is likely to grow heading into the summer vacation season, with air travel likely to exceed pre-pandemic levels in much of the Western world.

“Demand is turning back on almost as quickly as it turned off,” says Capital Group equity analyst Todd Saligman, who covers the aerospace industry in the U.S. and Europe. “Many U.S. airlines reported that March was the strongest booking month in history, and we are seeing similar strength in Europe.”

Global conditions still present some headwinds to the industry, however. Ongoing COVID-19 shutdowns, especially in China, continue to limit the industry’s potential. Russia’s invasion of Ukraine helped send fuel costs sharply higher. And airlines are still offering fewer flights as they ramp up amid a pilot shortage.

“We’re not back to pre-COVID levels yet, but it’s just a matter of time,” Saligman notes. “Travel is a secular growth industry in a lot of countries. Only about 20% of the world’s population has ever been on an airplane. So there is huge room for growth, especially in emerging markets such as China and India, where the middle class is growing and air travel is still in its infancy.”

Air travel has a long runway ahead of it.

The emergence of the Omicron variant prevented airlines from fully participating in the broader COVID-19 recovery. That’s made many of them attractive from a valuation perspective, says Chris Thomsen, a Capital Group equity portfolio manager. And with the variant fading in many parts of the world, airlines and other travel-related companies are well positioned to recoup some of the steam they lost when the 2020 downturn brought the economy to a halt.

Thomsen saw evidence of that on a recent trip from London to Los Angeles.

“The airports were crowded, restaurants were bustling, and flights were full,” he says. “I think we are in a post-COVID world now. People want to get out and do all the things they couldn’t over the past two years. That’s going to benefit the travel industry for the next few years at least.”

Indeed, two of the largest U.S. carriers — American Airlines and Delta Air Lines — had forecast record-high revenue for the quarter ended June 30. In recent earnings calls, airline executives said they expect sales to soar during the summer travel season. “Demand is stronger than I’ve ever seen in my career,” said United Airlines CEO Scott Kirby, “and that’s even before business travel fully recovers.”

Airlines face potential short-term turbulence.

Optimism for the airline industry comes with a few caveats. The war in Ukraine could reduce air travel, especially if the conflict spreads. Further COVID-19 restrictions could slow growth. Airline stocks have already shown how volatile they can be: As a group, U.S. airline stocks fell 31% in 2020 as government-imposed lockdowns and bans on international travel brought air traffic to a virtual standstill. They dropped a further 2% in 2021, even as a reawakening economy lifted other sectors. It’s been a mixed bag so far this year, with the sector down in the first half, but sporting better results than the broader S&P 500 Index or the industrials sector.

Another burr: The war in Ukraine has contributed to a meteoric jump in the price of jet fuel, which increased 98.1% in the year ended July 1, surpassing the rise in oil prices by a wide margin. Fuel is generally the second-largest expense for airlines, after labor.

In normal times, such a dramatic increase in jet fuel prices would hurt the highly competitive aviation industry. But these aren’t normal times.

“Airlines have largely been able to pass these costs along in the form of higher airfares,” Saligman explains. “These stocks will likely continue to be volatile, but I think the next six to 12 months could be a very strong period for the airlines, as well as cruise lines and other travel-related companies.”

What about the possibility that Zoom or Webex video calls will replace the need for in-person business meetings? We’ve already seen that story play out, says Steve Watson, a Capital Group equity portfolio manager.

“Years ago, conference calls were supposed to kill business travel, and that never really happened either,” he notes. “People who generate revenue face-to-face will be traveling.”

Over the long term, the outlook is favorable, says Watson, who holds airlines, cruise lines and booking companies in his portfolios.

“I think COVID will go away, and people will want to fly again — it’s that simple,” he says. “Investors should focus less on the timing and more on what cash flows and earnings will look like in the months and years ahead.”