"I wouldn't rule out owning an entire airline," the billionaire investor and Berkshire Hathaway CEO told CNBC.
In an annual letter published on Saturday, Buffett said the company is searching for deals but is struggling to find one for a good price. Airline stocks are trading at lower multiples than the S&P 500.
Buffett surprised investors in 2016 after Berkshire revealed it took stakes in the largest U.S. airlines. Buffett's stakes in American Airlines, Delta Air Lines, United Continental Holdings and Southwest Airlines were worth close to $10 billion based on Friday's closing prices and Berkshire's recently disclosed investments.
Buffett had long shunned airlines and had been so opposed to investing in airlines in the past that he told shareholders in a 2007 note that "if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."
But airlines have recently enjoyed a stretch of profitability, helped along by a plunge in fuel prices in mid-2014 and record numbers of travelers who are taking to the skies.
Buffett told CNBC in an interview that the industry may not be out of the woods entirely.
"It's a business that's always subject to someone doing something very dumb, competitively," he said.
The chances of that happening are less now following a decade of mega-mergers, Buffett said.
"The industry was suicidally competitive for decades," he said. Now "it could turn into fierce competitive battles that wipe out earnings or it can be a business that's more decent but still subject to lots of competition. It's really hard to know for sure how it will develop. It's not risk-free."
Indeed, investors are still skittish about fare wars eating into company revenues as they compete with each other. Shares of United sank after the carrier announced plans for annual capacity growth of as much as 6 percent.
It wasn't clear which airline Buffett would purchase, if any. But he did say that the airline business climate allows carriers to form ultra low-cost airlines. Low-cost carriers Spirit Airlines and Allegiant Travel Company each have market capitalizations of around $2.7 billion, compared with the $25 billion market cap of American Airlines and Delta's nearly $39 billion.
Buffett last year told CNBC that many travelers are just focused on price and that they would rather fly for a lower fare than pay more for additional legroom or other perks.