China's airline deregulation since 1997 and the driving forces behind the 2002 airline consolidations

Zhang, Yahua; Round, David K.

doi:10.1016/j.jairtraman.2008.03.001

Cited by 75 publications

(36 citation statements)

References 20 publications

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“…• Connectivity generated at Chinese airports increased unprecedentedly in the years and by the transformation of the Chinese airline industry from an entity under military control into a business (Zhang, 1998;Zhang, Round, 2008;Shaw et al, 2009;Wang et al, 2011), were a significant source of this increase. Furthermore, network improvements in China coincided with significant destination quality growth, so that rising simultaneity effects were observed (Fig.…”

Section: Asiamentioning

confidence: 99%

How air transport connects the world – A new metric of air connectivity and its evolution between 1990 and 2012

Allroggen

Wittman

Malina

2015

Transportation Research Part E: Logistics and Transportation Re

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SUMMARY ObjectiveScheduled air transport services connect airports throughout the world and thereby enable interaction on a global scale. By doing so, they spur globalization (Hummels, 2007) as well as social and economic development (Lakshmanan, 2011). In order to facilitate integration of regions into global value chains, planners, scholars and policymakers therefore need to understand as to how scheduled air transport services link a region to other markets. For this purpose, connectivity metrics have been developed, which measure the degree of connections between airports (Burghouwt, Redondi, 2013). In particular, the 'connection quality-weighting' approach (Veldhuis, 1997;Burghouwt, de Wit, 2005) has been used to compute the aggregate quality of all available connections at an airport with regard to their properties in quickly bridging distances. However, such a metric has neither been calibrated on the basis of observed passenger behavior nor been computed for the world's airports across a multi-decade time series. This paper sets out to develop the first such metric and to discuss global airline network development between 1990 and 2012 from a connectivity perspective. How Air Transport Connects the World 4 MethodologyThe Global Connectivity Index (GCI) for each airport is computed by summing the connectionquality of each available flight connection weighted by the interaction potential, to which the connection provides access. This requires three levels of analysis. First, on the link-identification level, we identify from OAG flight schedules all scheduled nonstop and onestop connections, which are available to passengers at each airport. Second, on the link-quality level, we compute each connection's frequency and relative connectivity value as compared to (hypothetical) nonstop flights. The relative connectivity value is derived from flight duration and layover time and calibrated through observed routing data for US passengers. Third, on the destination-quality level, we model the interaction potential, to which each worldwide airport provides access. For this purpose, we use gridded wealth-adjusted population data and a distance-decay function. Transaction-specific idiosyncrasies such as tastes or fares, which vary among potential passengers and impact on each passenger's itinerary choice, are not considered since they cannot be aggregated to the route level, yet. Results By computing yearly GCITo date, no analysis exists which evaluates 'quality-weighted' connectivity and/or centrality at the world's airports with the help of an empirically calibrated model. Such a model is developed in this paper. We compute these metrics to analyze worldwide connectivity and centrality trends The remainder of this paper proceeds as follows: In Section 2, the building blocks of 'connection quality-weighted' connectivity and centrality are outlined. Section 3 develops the connectivity and the centrality metrics. Global and world-region trends in connectivity and centrality between 1990 and 2012 are analyzed in Sect...

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Section: Asiamentioning

confidence: 99%

How air transport connects the world – A new metric of air connectivity and its evolution between 1990 and 2012

Allroggen

Wittman

Malina

2015

Transportation Research Part E: Logistics and Transportation Re

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“…The year 1997 marked the start of deregulation, privatisation, and consolidation for China's airline industry (Zhang and Round 2008). Since then China's airlines have experienced a period of unexpected shocks from both home and abroad; intense competition has occurred between domestic carriers; increased challenges have emerged from aggressive international airlines; further deregulation demands have come from foreign governments; and a worldwide trend towards airline alliances has grown.…”

Section: Introductionmentioning

confidence: 99%

Policy Implications of the Effects of Concentration and Multimarket Contact in China’s Airline Market

Zhang

Round

2009

Rev Ind Organ

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Unlike many other mergers in developed countries, which might have been assessed and their effects estimated by antitrust authorities before being granted antitrust immunity, the airline mergers that swept China's airline industry in 2002 occurred with no antitrust challenge. These mergers provide the opportunity to study important market power issues in China's airline markets. Given that increased concentration and multimarket contact are the main legacies of an airline merger, the effects of mergers on these variables can raise the potential for the exercise of market power. However, an examination of the period [2002][2003][2004] during which the Chinese airline mergers occurred shows that the resulting increased concentration and enhanced multimarket contact did not have important consequences for airfares in Chinese city-pair markets. The presence of Hainan Airlines appears to have played an important role in suppressing the airfares charged by China Eastern and China Southern.

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“…Meanwhile, the CAAC required that the airline that actually transported the passenger must settle the ticket at 85% of the published airfare (1130 Chinese Yuan) with the issuing carrier (Xu & Chen, 2007). Although this has never been formally confirmed, this senseless requirement is consistent with the CAAC"s attitude towards competition, i.e., it does not want to see strong competition between airlines or the offering of deep discounts (see Zhang & Round, 2008 for details). Some passengers might abuse this privilege by buying a cheap night ticket and flying on peak hour flights with another airline.…”

Section: Model Estimation and Discussion Of Resultsmentioning

confidence: 80%

The Shanghai–Beijing “Air Express” Service Model and its Impact on the Pricing Behaviour of Airlines

Zhang¹

2011

Asia Pacific Journal of Tourism Research

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Using departure day airfare data, this paper examines the pricing pattern on the ShanghaiBeijing route and reveals anti-competitive pricing behaviour following the introduction of the "Air Express" service. This new service adds limited value to passengers because of the airport facility constraints. Jointly providing the "express" service has provided a channel through which the three dominant players can communicate effectively to achieve more stable prices at a higher level. Interestingly, lower prices charged by the fringe airlines on this route were accommodated by the big ones. Meanwhile, the three dominant airlines did not exhibit any obvious deviation in pricing from each other.

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China's airline deregulation since 1997 and the driving forces behind the 2002 airline consolidations

Cited by 75 publications

References 20 publications

How air transport connects the world – A new metric of air connectivity and its evolution between 1990 and 2012

How air transport connects the world – A new metric of air connectivity and its evolution between 1990 and 2012

Policy Implications of the Effects of Concentration and Multimarket Contact in China’s Airline Market

The Shanghai–Beijing “Air Express” Service Model and its Impact on the Pricing Behaviour of Airlines

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