If spinoffs are the airline industry's future, then Air Canada is its undisputed leader.

Over the past two years, spinoffs at Canada's largest airline have led to the existence of four separate public companies -- the airline itself, low-cost partner Jazz, frequent-flier program Aeroplan and ACE Aviation Holdings.

All are traded on the Toronto Stock Exchange. ACE itself also sold off 70% of its maintenance operation this year.

Shares in the two non-airline companies have done well, while the airline stocks have dropped. In general, the performances mirror the industry's history. While airlines tend to be profitless, everyone who touches them -- aircraft makers, airports, suppliers, investment bankers, executives and employees (with some notable post-Sept. 11 exceptions) -- does fine.

Considering this, it should be no surprise that the industry's transaction du jour is to spin off frequent flier programs, following the Air Canada model.

Over the past year, talk of consolidation among the airlines has faded. This year has seen the collapse of proposed takeovers of Delta ( DAL) by US Airways ( LCC) and Midwest ( MEH) by AirTran ( AAI).

Additionally, despite years of hunting for merger partners, United ( UAUA) CEO Glenn Tilton came up short. Now Tilton is one of two leading industry voices calling for spinoffs.

The other is Hannes Smarason, CEO of the Icelandic company FL group. Over the past year, FL Group has accumulated 9.1% of the shares of American Airlines parent AMR ( AMR). In a September letter to the AMR board, Smarason urged a frequent-flier program spinoff, writing that "the concept of unbundling has already been proven to generate value," and citing Aeroplan as the prime example.

Since the 2005 spinoff, he wrote, Aeroplan has outperformed North American airlines, as its market capitalization has doubled to about $4 billion.

Industry experts say there is little reason to think Air Canada's strategy would make sense in the U.S. "The U.S., though a much bigger market, is also a much more competitive market," says Calyon Securities analyst Ray Neidl. "Also, separating the frequent-flier plan could remove an airline from some of its best customers."

Air Canada has been a harbinger of the future in some respects. It was early into bankruptcy following the Sept. 11 attacks, filing in 2003 and emerging in 2004. Then the spinoffs began.

Although Air Canada now trades around C$15, consultant Mike Boyd says the carrier is building a strong franchise. "Air Canada understands its global role," he says. "It understands that the future is not flying Ottawa to Calgary -- there is no real domestic growth in Canada -- but in flying people through Canada on routes like Latin America to Asia, the No. 1 growth market."

But Boyd says the Aeroplan spinoff has little relevance to the U.S. No U.S. frequent flier program approaches Aeroplan in its market position as Canada's strongest loyalty program, he says, so a spinoff "would not bring what people think it will."

As for shedding a secondary airline like Jazz, "no way would that happen south of the border," he says. "What would you do, spin off Comair? Who would want it?"

The Aeroplan spinoff hurt Air Canada, which lost both revenue and control, says consultant Robert Mann.

"After they spun it off, they made it unattractive to be a member," he says, because it came to be viewed as a profit center rather than a tool to attract passengers. Now, it takes more miles to claim seats and there's a mileage expiration period. Additionally, travelers have a deadline for using miles and they get smaller rewards for discounted tickets.

"Investment bankers can construct a PowerPoint that could sell the Brooklyn Bridge," Mann says. "They don't realize how tenuous the hold these programs have on customers is, especially when the airline has a limited product differentiation vs. its competitors."