After years of deriding the airline industry, Warren Buffett confirmed last week that his holding company, Berkshire Hathaway, has invested nearly $1.3 billion in four big-name domestic carriers, notes Frank Holmes, of US Global Investors, which manages US Global Jets ETF (JETS).

Buffett's Berkshire Hathaway (BRK.A) purchased shares in American Airlines (AAL), Delta Air Lines (DAL), United Continental Holdings (UAL) and Southwest Airlines (LUV).

The stake is a dramatic reversal for the 86-year-old investing wizard, who previously called the industry a capital “death trap”.

The thing is, Buffett held these opinions long before airlines began making the fundamental changes that would flip their fortunes from bankruptcy to record profitability.

When Buffett first tried his hand at making money in the aviation industry in 1989, airlines were still struggling in a fiercely competitive marketplace.

Many carriers called it quits, including President-elect Donald Trump’s Trump Shuttle, which ceased operations in 1992. Others spent years in bankruptcy court.

But following the massive wave of industry consolidation between 2005 and 2010, a new business environment emerged, one characterized by disciplined capacity growth, new sources of revenue, greater efficiency and a commitment to repairing balance sheets.

Buffett also likes airlines now for the same reason he’s long been a fan of railroads—namely, the barriers to entry are extremely high if not entirely impenetrable to new competitors.

As a value investor, he prefers inexpensive stocks, and among industrials, airlines are cheapest of all, based on price-to-earnings and cash flow.

Challenges still remain, of course, but domestic airlines today are profit-making, dividend-paying machines.

In the first nine months of 2016, the top nine U.S. carriers reported combined net income of $18.3 billion. That’s quite an improvement from the $11.2 billion they pocketed for the entire year in 2014.

Over the same nine-month period, airlines returned $11.4 billion to shareholders via stock buybacks ($10.5 billion) and dividends ($912 million), according to industry trade group Airlines for America.

In the near-term and long-term, airlines continue to look very attractive. Air travel demand is rising as incomes grow and the size of the global middle class expands. Much of the demand is being driven by affordable airfare, which is at its lowest in seven years.

The picture looks just as optimistic further down the road. The International Air Transport Association sees global passenger demand nearly doubling over the next 20 years. The group expects 7.2 billion people to fly in 2035, up dramatically from 3.8 billion last year.

Donald Trump will become the first U.S. president who was formerly an airline executive. He also boasts an extensive background in tourism and hospitality. Industry leaders, therefore, hope Trump will prove to be a powerful ally and take their side on several key issues.

U.S. carriers have been pushing Congress for years to reform air traffic control so that the steering wheel is in the hands not of the FAA, but a private, not-for-profit entity.

The industry would also like to see open talks with several state-owned Middle Eastern carriers, whose governments provide tens of billions of dollars in “unfair” subsidies every year.

The airline industry has proven itself resilient time and again, emerging stronger from a decade ago.

For investors, the group is relatively inexpensive and generous with its dividends and stock buybacks. Changes might very well be in the cards, but I remain bullish on airlines, just as Warren Buffett is.

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By Frank Holmes, of US Global Investors