Air New Zealand was honoured for the fourth year due to its in-flight innovations, financial performance and environmental leadership and commitment to a young fleet, according to the Australia-based website.
AirlineRatings.com editor-in-chief Geoffrey Thomas said: 'In our objective analysis Air New Zealand came out number one in virtually all of our audit criteria, which is an exceptional performance.'
The airline also took the top gong for best premium economy class for the third time, in a year which has seen investments in a streamlined and refurbished fleet, a multi-million dollar lounge redevelopment and three new international routes.
Australian airline Qantas scooped the second prize leaping up from fourth place last year.
The airline was praised for its financial turnaround and is set to take delivery of its first Boeing 787s in 2017. The lie-flat beds on all of its A330s have ensured a high customer approval rating.
Aviation stalwart Singapore Airlines took third place after introducing its new premium economy, revamped business class and the new A350, this past year. It was also awarded a prize for best economy offering.
The Hong Kong flag carrier, Cathay Pacific, held the fourth spot this year while Virgin Atlantic/ Virgin Australia moved three places higher, taking the number five slot. Virgin Australia has introduced its new business class while Virgin Atlantic reintroduced a number of 787s.
British Airways has stormed into the top 10 at number six following the introduction of its 787s and A380s while rolling out cabin enhancements.
A pioneer of luxury, Middle Eastern carrier Etihad Airways was named the seventh best airline in the world as it launches new aircraft 777X and increased its fleet of 787s. It also has 65 A350s on order.
While flyers can opt for The Residence suite, a three bedroom 'penthouse in the sky' with its own butler and chef for approximately $38,000 (£26,000), the airline's first-class offering is also making waves. Etihad won the world's best first class award.
Japanese carrier All Nippon Airways scored eighth place following the launch of its 777x, while Taiwanese airline Eva Air took the ninth spot.
Germany's largest airline Lufthansa held the number ten spot again this year.
Airlineratings.com developed its seven-star ratings system after two years of evaluation and the system is now endorsed by the International Civil Aviation Organization.