CHARLOTTE, N.C. (

TheStreet

) -- With fuel prices falling, some investors have turned their attention to a likely beneficiary -- airlines.

But airline stocks have historically been volatile, so S&P Capital IQ is suggesting two mutual funds, both from

Fidelity

. The funds are

Fidelity Select Transportation

(FSRFX) - Get Report

and

Fidelity Select Air Transportation Fund

(FSAIX) - Get Report

.

It is safe to say that few investors follow Capital IQ's logic. Select Transportation had assets of just $201 million as of April 30, while Select Air Transportation had assets of just $69 million. You can't expect such funds to have the billions of dollars in assets that a technology fund might have, said a Fidelity spokeswoman, who noted: "We would expect sector funds with a narrower investment focus, such as the Select Air Transportation portfolio and Select Transportation portfolio, to have a more targeted audience."

S&P Capital IQ screened 7,300 domestic equity funds and the two Fidelity funds were the only two whose top 10 holdings included more than one of the airline stocks ranked as a buy by S&P Capital IQ equity analysts.

Select Transportation had 92% of its assets invested in U.S. equities as of April 30, when its top 10 holdings included three airlines:

Delta

(DAL) - Get Report

,

United

(UAL) - Get Report

and

Southwest

(LUV) - Get Report

.

Other top holdings include the overnight package carriers -- the No. 1 holding, representing 19% of assets, is

UPS

(UPS) - Get Report

-- as well as railroads. Year-to-date return including dividend reinvestment and capital gains is 3.8%; the share price has been flat. The expense ratio is a relatively low 0.88%.

At Select Air Transportation Fund, focused specifically on airlines, year-to-date return is about 7% and the expense ratio is a relatively low 0.96%. Top 10 holdings including Delta, Southwest, the overnight package carriers and

Boeing

(BA) - Get Report

. Again, UPS is the top holding, as of April 30, representing 15% of assets.

Airlines ought to benefit from recent fuel cost declines, wrote Jim Corridore, Capital IQ airline analyst, in a recent note. In 2011, he wrote, the U.S. airline industry spent about $47 billion to buy 16.4 billion gallons of jet fuel, consuming 36% of industry revenues.

" It stands to reason, in our view, that a drop in jet fuel prices would be good for the industry, so long as the drop is not due to such a severe economic downturn that passengers stop flying," Corridore said. "So far, the economic downturn does not seem to be translating into reduced air travel demand, and S&P Capital IQ expects 2012 to be a profitable year for the U.S. airline industry."

He has buy recommendations on

US Airways

(LCC)

, Delta, United, Southwest and

Alaska

(ALK) - Get Report

: all have four-star ratings on a scale from one to five, with five being a strong buy.

Another way to invest broadly in airlines is the

Guggenheim Airline Fund

(FAA)

, an exchange-traded fund. This microscopically sized fund had assets of just $15 million as of April 30. Delta was the top holding at 17% of assets, followed closely by United and Southwest: The fund also invests in foreign carriers. Year to date, the fund is up about 9%.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here:

Ted Reed

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http://twitter.com/tedreednc

.

>To contact the writer of this article, click here:

Ted Reed