Airline winners and losers

Aviation Week has just released its annual Top-Performing Airlines (TPA) study, and as always, it gives us a unique perspective on which carriers are on the rise and which are sinking.

The main product of the study is our rankings of 71 airlines from around the world, from regionals to the mega-carriers. A major feature this year is the dominance of the smaller and mid-size airlines. AirAsia scored highest, with Air Arabia, Ryanair, Hainan Airlines, and Allegiant close behind. The highest-ranked large carrier was Singapore Airlines (SIA), in ninth position. This story gives more details on the best in each region and size category, while subscribers can see the full rankings and other data here.

I think one of the strengths of the TPA study, compared to others, is that ours is completely data-based, and not subjective. In other words, we put a vast amount of financial and operational data through a range of formulas, and let the numbers pick the winners. I’ve heard airline executives tell me that this makes our rankings a lot more useful than other airline lists or awards.

Because of this, the same airlines have often featured near the top of the table. SIA, for example, was first in the mainline category for six out of seven years. Last year it had a particularly strong showing with a total score of 99 out of 99 – the first time that had been achieved in the TPA study.

But this year, SIA’s score took a tumble, dropping almost 29 points. It still heads the new large airline category, but it is notably weaker. Of course, it isn’t alone – Cathay Pacific also took a sharp nose-dive. We discuss these and other trends more extensively in this Aviation Week story that is part of a TPA package in this week’s magazine.

The biggest change this year was in our airline peer groupings. Previously, we had grouped airlines according to business model – mainline, LCC/niche, and regional. Each category had its own scoring method, tailored to that industry segment. So it was difficult to make comparisons between segments.

This year, we decided to rank all airlines with the same methodology, so we could compare across the board. We still presented them in the magazine in three size groups, but now the groups are determined by revenue size rather than business model. These days there are so many grey areas between models that it was becoming very hard to classify airlines that way.

Now we have a much better idea of how strong the smaller niche airlines – and the  “growth” LCC carriers – are compared to the majors. This year its pretty obvious that the smaller airlines are in the ascendant.

A look through historical scores (restated using our new methodology) shows that the smaller carriers would have featured heavily in the overall top 10 in previous years too. However, this is not the reason for SIA’s relative slide this year – it’s not just a result of throwing more agile growth carriers into the mix. After all, even using the new methodology, SIA would still have been first overall by a huge margin last year.

So the change in scoring is not behind SIA’s drop. Something else is happening. A large part of the explanation is that all the larger, mainline carriers are hurting. Of the 21 airlines in this category, All Nippon Airways was the only one to see its score rise. And the large carriers from the Asia-Pacific region were particularly hard hit.

One of the big questions is whether this will be a temporary blip for a traditionally strong performer like SIA, or whether it is a longer-term trend. Next year’s rankings – and a mid-term update later this year – should give us a better idea of the answer.

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