Warren Buffett's change of heart on aviation sector

SQUAWK BOX -- Pictured: Warren Buffett, chairman and CEO of Berkshire Hathaway, and consistently ranked among the world's wealthiest people, in an interview with Squawk Box on February 29, 2016 -- (Photo by: Lacy O'Toole/CNBC/NBCU Photo Bank via Getty Images)

Billionaire investor Warren Buffett has done a U-turn on the aviation industry.

For over 20 years he has avoided the aviation sector, warning that it is a bad investment.

But now he has revealed that his company Berkshire Hathaway has bought shares in four US airlines: American Airlines, Delta Air Lines, United Continental Holdings and Southwest Airlines.

That prompted a rally in the the share prices of all four airlines when trading began on Wall Street.

In a regulatory filing Berkshire Hathaway said it had bought US$797 million of American, $249.3 million of Delta and $237.8 million of United shares, before the end of November.

Since then it has begun buying shares in Southwest.

Hundreds of millions of dollars might sound like a lot, but given Berkshire Hathaway's overall size the investments are relatively small.

Regardless, it does mark a significant change of mind for Warren Buffett.

Back in 2001 he said he'd sworn off airlines for life, after an earlier losing money investing in US Airways Group.

He joked that "Now if I get the urge to invest in airlines, I call an 800 number, and I say: 'Hello, my name is Warren, and I'm an air-o-holic'".

"Sometimes, it takes them 10 minutes to talk me out of it, sometimes more."

The US aviation sector surged two years ago, before encountering more turbulence.

Analysts believe Donald Trump now sees a more stable future for the sector. He has been investing in transportation for years, including American railways.

If you think that airports and planes are crowded now, it is nothing compared to what is predicted for 20 years' time.

The International Air Transport Association (IATA) expects global passenger numbers will almost double to 7.2 billion by the end of 2035, from 3.8 billion now.

That is an annual increase of 3.7 percent and will be led by growth in the Asia-Pacific region.

The IATA says the Asia-Pacific region will account for over half of new passengers.

It predicts China will overtake the United States as the world's largest aviation market (traffic to, from and within) around 2029.

That would see total passenger numbers for China rise from 817 million to 1.3 billion.

Total passenger numbers in the US will grow by 484 million to 1.1 billion annually.

India is expected to overtake the UK to become the third biggest market, with total numbers of 442 million (an increase of 322 milllion).