If Nadal wasnt declining in 2011 then should I say Federer was declining in 2007 when he won 8 titles and 3 slams?
Nadal's 2011 actually reminds me more of Fed 2008, Nadal had 3 titles and Fed 4, Nadal 3 slam finals and Fed 3 slam finals, Fed dominated by Nadal and Nadal dominated by Djokovic and so on.
It's what the definition of decline is.
If player X plays great tennis as good as ever, but a competitor improves strongly. Than I don't really consider it a decline of player X. Than I think that his competitor has improved, but not necessarily that player X declined. I consider a decline when the personal quality of tennis of player X goes strongly down.
Although you might also look from a different perspective indeed: looking purely to the rankings and statistics. And than it is true that player X was on the rankings surpassed, because his competitor improved so much. So on the rankings/statistics he declined indeed.
So the question is:
Should decline be based on the moment that the quality of tennis of somebody's own personal game goes down?
Or should decline be based on the time when he starts to fall in the overall rankings?
I would go for the first definition. But you can discuss about it.