The BRIC airlines are particularly focused on their very large domestic markets, says Jenks. This makes it more difficult to transfer capacity to international routes when their domestic economies slow. India, China and Brazil do not have strong global long-haul airline brands, or strong long-haul hubs, he says. For airlines in these countries, their “international route capacity is inferior to the inbound routes and branding of foreign competitors.”
Another feature of the TPA results is that some of the most troubled carriers in previous years are now among the most improved, says Jenks. For example, Thai Airways, American Airlines, Malaysia Airlines, Finnair and Air Berlin are among the top improvers in their categories.
In some ways, “this is what you'd expect in an early upturn environment,” Jenks says. But it also demonstrates that “nothing focuses the mind like a near-death experience.” TPA Project Manager and aviation analyst Michael Lowry emphasizes that all these carriers had a lot of scope to make gains since they had such low scores. But they have also “executed significant restructuring programs and succeeded.”
A trend that is no surprise in a strengthening industry environment is improved performance of the larger carriers—particularly the U.S. legacy airlines. This is in contrast to last year's TPA analysis, where the woeful performance of the large-carrier category was a notable feature. Although the scoring formula has been revised since then, only one of the airlines in this category saw its score increase in last year's study.
But despite this relative improvement of the majors, it is still the smaller niche carriers that are the star performers of the TPA rankings. Four of the Top Six airlines overall are from the small category, and eight of the Top 15. “Small is still better, but the gap is starting to close,” Neidl says.
As in previous years' TPA studies, the successful smaller airlines occupy lucrative niches and are at an optimal point in their growth cycles.
George Hamlin of Hamlin Transportation Consulting observes that despite the better performance of the large carriers, there are still only three represented in the Top 15. It is the “small carriers that are reinvigorating the industry,” he says. A closely related dynamic is the preponderance of comparatively new airlines at the top end of the table, Hamlin says. Only two of the Top 10, and five of the Top 20, were in existence before 1970.
Another trend is that many of the “true” low-cost carriers—including Spirit Airlines, EasyJet, Southwest Airlines and JetBlue Airways—saw score declines. Hamlin, however, cautions against overestimating this effect, since LCCs are still very well represented in the Top 10.
Rather than linking LCC performance to the cycle, Hamlin says the LCC declines in the U.S. and Europe represent a “rebalancing,” and that “history is still being written as to how the balance between the LCCs and legacies” will evolve.