Even though the commercial airline industry is on track to see its best profit ever, the stocks are stuck in a holding pattern.
The benefits of higher ticket prices, strong airline traffic and low fuel prices aren't doing much to lift the stocks. In fact, the NYSE Arca Global Airline Index, which tracks the industry, is down by double digits so far this year.
It's a predicament that Institutional Investor's top-rated airline analyst ties to concerns about potential capacity creep and weak unit revenue trends.
"The fact of the matter is the industry is holding onto about two-thirds of fuel cost savings right now," said J.P. Morgan Chase senior airline analyst Jamie Baker on "Fast Money" this week. "We see a lot to be optimistic about with the stocks and industry fundamentals going into 2016," he said.
Baker also noted that the aftermath of the Paris terror attacks earlier this month shouldn't have too much of an effect on the airlines.
"Airline investors learned do not underestimate the tenacity of travelers when confronted with events like these. The Bali bombing, London, Madrid, Mumbai — none of these events have had a discernible impact on air travel demand," he said.
In this environment, Baker chose Delta Air Lines as his top pick.
"It's Delta where we feel the most certain about our earnings model," said Baker. "Delta significantly overpaid for fuel in the first half of this year because they continue to cling to the antiquated notion of fuel hedging. That turns into an advantage in the first half of 2016. They are likely to show more margin momentum than any carrier in the space."
Shares of Delta are down about 1 percent so far this year.