The global airline industry appears to have passed its latest financial peak, and the billion-dollar question now is how far—and how quickly—it will fall before bouncing back. Airlines are hoping that the dip is a brief one, but the cyclical history of this sector shows that a sustained drop is just as likely.

The latest mid-term update to Aviation Week’s Top Performing Airlines (TPA) study reveals that the median score in the mainline/legacy category has leveled out and begun to decline, following two years of strong growth. The median score for the category dropped to 56 by the end of June 2011, compared with 58 at the end of 2010. While this is still far above the level of the last trough in 2008, it represents a definite change in momentum.

All TPA scores are based on operational and financial data from the trailing 12-month period, for publicly traded airlines only. A full TPA study is completed annually, and this year’s report, released in July, uses data through the end of 2010. The mid-term update is designed to give a snapshot of industry dynamics halfway between the full TPA reports.

The overall trend in the mid-term update echoes recent financial forecasts by the International Air Transport Association (IATA). The airline group estimates that 2010 was the peak year for profitability in the current industry cycle. The industry collectively is expected to earn a profit of $6.9 billion this year, but this is down from the $16 billion profit in 2010. The 2012 profit is expected to fall further to $4.9 billion, IATA says.

Some surprising variations show up in the regional breakdown of the June 2011 TPA results. In the last full TPA study, the Asia-Pacific, North America and Latin America regions were strongest, with Europe lagging. But in the new mid-term report, Europe is the only region whose median TPA score is still growing.

This trend is also apparent in the updated top 10 rankings. Singapore Airlines is still ranked first, although its total score has declined. Cathay Pacific’s score, previously the second-highest, has plummeted 14 points to 69. Almost all the Asia-Pacific carriers in the mainline category have seen their scores drop.

Most European carriers, meanwhile, have boosted their scores. Lufthansa has climbed to fourth place, and SAS and Finnair have reappeared in the top 10 after healthy increases in their scores.

IATA notes in its latest forecast that while the outlook is not good for Europe, passenger demand has held up better than expected. This is partly due to a weaker euro that is boosting inbound tourism and exports. At the same time, a global cargo decline is hurting the Asia-Pacific carriers, because they rely more heavily on freight. TPA Project Manager Michael Lowry says that many of the Asian carriers “operate from export-driven countries that are struggling with market slowdowns in the U.S. and Europe.”

Lowry expects to see “further softness” in the second half of 2011, and this likely will mean scores for all regions will be down from 2010 levels in the next full TPA study. “Lower median results for Europe are in the cards, but probably lagging the declines we will see from the other regions,” Lowry says.

Aviation Week Intelligence Network subscribers can see more on the mid-term update at the Top Performing Airlines website, AvationWeek.com/awin/tpa. It also includes the results of the last full TPA study.