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.

This dynamic obviously has ramifications for the big airlines that are attempting to lift their performance by merging into ever-larger combinations. So far, there is little evidence in the rankings to suggest that this is working. “There are economies of scope and scale up to a certain point, beyond which they diminish,” observes TPA adviser George Hamlin.

It is partly because of their size that the most successful smaller airlines can take advantage of market niches. Adviser Craig Jenks says their niches can be based on geography, market segment or product range. As Hamlin says, these carriers are thriving by “figuring out what they are and what they can do, instead of trying to be all things to all people.”

Another feature of this year's TPA study has been a general decline in scores, which are predominantly based on full-year 2011 data. In the large-airline tier, all but one of the 21 carriers saw their scores drop, with All Nippon Airways (ANA) the sole exception. This reflects a tough industry environment.

The smaller carriers toward the top of the rankings are much better equipped to thrive in such conditions, says Jenks. “They can take advantage of the non-growth of the larger players during downturns.” He notes that these airlines are more agile, make decisions faster, and can adapt capacity more quickly.

Neidl says the major carriers could see big gains when the global economy strengthens, and could be best equipped to leverage an improving industry environment. Terry, however, stresses that the comparative strength of the smaller airlines is no flash in the pan. TPA data show they also feature prominently when carriers are ranked by average score over five years.

The overall weakness in TPA scores from 2011 reinforces the International Air Transport Association's view that 2010 was the peak of the current market cycle. Higher fuel prices and Europe's economic woes are obvious culprits, and major carriers in particular are being affected by a soft cargo market.

Jenks says the continuing growth of the large Persian Gulf carriers is also a challenge for the mainline airlines. These carriers are not represented in the TPA study because they are privately owned, but they still cast a giant shadow over the results. Emirates, Etihad and Qatar are dominating certain one-stop international markets such as India-Europe and are pushing into more long-haul city pairs.

With all these factors to contend with, particularly the fuel-price surge, the surprising thing is that the TPA results did not dive more sharply, the advisers say. Compared to previous years, carriers “handled this fuel-price crisis relatively well,” says Hamlin.