Many airlines in this region are also taking a while to digest mergers, Neidl notes. But he stresses that the mergers will eventually make these carriers much stronger, particularly the LAN/TAM deal.
Copa is again the standout among the Latin American airlines, and this year is ranked eighth overall. In keeping with the global trend, one of the smallest carriers in the region is outshining its larger rivals.
The Panama-based airline benefits from a geographical location which makes its hub ideal for connecting traffic between the U.S. and Latin America. It still has “multiple areas of really profitable growth potential,” says Neidl. Most importantly, Copa has proven it can keep its operating margins high while growing rapidly.
North American airlines had a relatively good year in 2011, the TPA advisers say. The major carriers saw score declines, but not as much as their peers in other regions.
The large U.S. airlines are still working to streamline themselves after a round of consolidation. So it remains to be seen how much stronger the mega-carriers will be when the mergers are fully absorbed.
While it is uncertain if being bigger helps, having fewer players certainly does. Particularly if American Airlines and US Airways merge, the industry will be reduced to a “rational level where the airlines can get an adequate return on investment,” says Neidl.
Neidl projects the U.S. carriers are set to have a better year in 2012 than they did in 2011. Financial reports show that Delta Air Lines in particular has seen a surge over the last two quarters. Concerns over the U.S. economy persist, but most of the majors should continue to be profitable even if fuel prices climb above current levels, says Dyment.
As with other regions, in North America the smaller niche airlines are the stars. The Top-10 list for the region features no fewer than eight carriers from the medium and small tiers (see chart). Allegiant is the best in the region and fifth overall. Spirit Airlines boasts the second-highest overall score improvement, with its westward expansion into new markets obviously paying off.
Southwest Airlines is still the highest-ranked of the large U.S. airlines, but it also had the second-highest score decline of any North American carrier. While this is partly due to Southwest's acquisition of AirTran Airways, Southwest also faces serious challenges. It has reached a transition point, Neidl says. It is no longer a niche carrier owing to its nationwide presence, and has limited domestic growth opportunities. This is why Southwest is turning to markets in the Caribbean and Mexico.
In Europe, the larger low-cost carriers may soon find themselves with the same dilemma as Southwest. Ryanair and EasyJet are both standouts in the TPA study, with Ryanair third overall, but growth in Europe is becoming much harder, says Terry.