July 02, 2012
Learn more about the Top-Performing Airlines 2012 in an interactive presentation.
Call it the sweet spot—that stage in an airline's life cycle where its size is perfectly suited to its market and business plan. This high-performance window can be narrow, and once a carrier moves beyond it, it may never again see the same level of success.
Aviation Week's Top-Performing Airlines (TPA) study highlights the carriers that are currently in this elusive zone. And the inescapable conclusion is that almost all are smaller and exploiting a particular niche. In today's airline industry, bigger is not necessarily better.
This year important changes have been made to the TPA rankings. Instead of grouping airlines by business model and examining each category separately, they have been divided into tiers by size. This allows the same scoring formula to be applied to all airlines, inviting comparison between the best in each tier.
The results of this comparison are revealing. The overall Top-10 list is dominated by airlines in the medium and small categories. Nine of the 10 fall into these brackets, and only one—Singapore Airlines (SIA)—is in the largest tier. While SIA is once again the best large carrier, it is the relative newcomers like AirAsia that are upstaging the giants.
“It seems to be there is a sweet spot for high performance,” says Bryan Terry, a member of the TPA council of advisers (see box). “If you grow past a certain point it improves your viability, but it doesn't necessarily improve your overall performance.”
The advisers regard Southwest Airlines as an example of a carrier that has moved beyond its ideal size range. It is no longer an upstart, and growth opportunities are much harder to find, says Raymond Neidl, a TPA adviser. Terry notes that some of Europe's largest low-cost carriers may be the next to reach the same inflection point.