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The easyJet share price rise is falling back. Is this a chance to buy?

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An easyJet plane takes off
Image source: London Luton Airport

As we’ve looked forward to the next phase of lockdown easing for the past few months, easyJet (LSE: EZJ) has been gaining. The budget airline’s share price had been rising gradually from the beginning of the year.

But now we’ve actually moved into the next phase of opening up, it’s fallen back a bit. After reaching a high of 1,095p on 7 May, the shares have shed 10% and ended Monday at 986p.

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We’re looking at a fall of only 4% for easyJet over the past two years, so didn’t the pandemic have much of an effect then? Well, yes it did. And easyJet shares fell nearly 70% in the first month-or-so of the crash. Buy they had been soaring in the first few months of 2020, so much of the fall was just giving up those gains. Still, easyJet has recovered from the pandemic crash very strongly.

Looking back over five years, its share price is down 33%. And it’s been very volatile over that period too. To me, that tells me not to invest in airlines — and I think easyJet is one of the best around. By comparison, International Consolidated Airlines is down 62% over the same five years.

Beating the easyJet share price

And as for Ryanair Holdings (LSE: RYA), well… oh, it’s up 26%. And 26% over five years is a decent return. Hmm, let’s look back further. Over the past decade, the easyJet share price has risen 125%, ahead of the Footsie. But Ryanair has beaten it hands down with a 390% climb.

So have I misjudged airlines? In particular, have I misjudged Ryanair? And why do I keep getting drawn to a sector that I keep thinking I should never invest in?

It’s partly because I’ve flown with both these budget airlines a few times. As a customer, I like easyJet, and I don’t like Ryanair. When I fly with the former, I just turn up and go. But with the latter, there always seems to be an extra hoop to jump through to avoid paying some extra charge or other. And Ryanair consistently comes bottom of customer satisfaction surveys.

Ryanair share price strength

So why has the Ryanair share price been convincingly beating the easyJet share price? I’d always fly with easyJet, given the choice, and I think that’s the nub of it. Due to the way routes and landing slots are managed, I don’t think I’ve ever had a direct choice between one or the other. Either one flies there, or the other does.

And when we have mini-monopolies over routes, maybe the penny-pinching, poor customer service, business model is superior. I mean, what is there to lose? So, will I finally turn and invest in one of these airlines? I keep thinking maybe I will, and maybe my aversion to airline shares is losing me some potential profits.

But then I remember that airlines are hostages to fuel prices, and offer little in the way of competitive choice other than price (at least, where there’s competition on routes).

So no, the weakening easyJet share price still doesn’t tempt me, and nor does the strong Ryanair share price.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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