Shares of global airline stocks advanced more than 12% last week, indicating that investors were unfazed by the service outage that temporarily grounded planes in the U.S.
Why Airports Are The Ultimate Moat Investment
When evaluating stocks, we try to look for companies protected by a moat. In this context, a “moat is an advantage that some businesses enjoy, whereby the barriers to entry make it exceptionally difficult for competitors to come in, take away market share and undercut prices.
Airports are one such business model that can be characterized this way.
Think about it: With few exceptions, most cities and metropolitan areas around the world can support only one airport. When you fly commercially, you generally do not have a choice as to which hub you arrive at. Take our hometown of San Antonio, Texas, as an example. Despite it being home to more than 1.5 million people, the city has only one international airport.