Network development of low-cost carriers in China's domestic market

Abstract

This paper examines China's LCC market and assesses the network development patterns from a geographical perspective. Overall, a nationwide LCC network has been formed with each individual LCC focusing on their own markets with limited overlap to avoid cut-throat competition. Spring Airlines has developed an advanced network supported by its core bases including Shanghai in East China, Shijiazhuang in North China, Shenyang in Northeast China and Shenzhen in South China. China United has developed a network radiating from Beijing. West Air and Lucky Air seem to be developing a hub-and-spoke network that contributes to the tourism industry in West China. The LCC network is affected by seasonal variations, especially for the routes to tourism destinations such as Haikou, Sanya and Xiamen. Hub cities, however, experience less seasonal impact. This research also finds that routes between 600-1800 km account for a large proportion of the LCC markets. Aviation policy, local government's subsidization and the expansion of the high-speed rail network have helped shape the landscape of China's LCC sector.

Welfare implications for air passengers in China in the era of high-speed rail

“…Individual carriers can develop their brands to make the demand for their individual services even more inelastic. For China's fullservice airlines (FSAs), developing an LCC subsidiary as their competition arm against HSR can be a consideration in response to the penetration of HSR given that the LCC sector has not been well developed in China, compared to the European, North American and Southeast Asian markets (Fu et al, 2015b;Wang et al, 2017;Wu et al, 2020). In fact, there is an opportunity for both transport modes to survive and prosper considering China's huge population and rapidly growing economy.…”

An analysis of the Chinese scheduled freighter network during the first year of the COVID-19 pandemic

“…To understand Chinese domestic freighter network structure and the impact of COVID-19, we adopt the CNT approach and compare the results before and after the COVID-19 pandemic. The CNT has been widely applied to analyse a country's overall air passenger network ( Wang et al, 2011 ; Hossain and Alam, 2017 ) and an individual airline's network to understand the strategy and competitiveness of the airlines ( Jiao and Wang, 2014 ; Jiang et al, 2017 ; Wu et al, 2020 ). A recent paper by Bombelli et al (2020) used the CNT to evaluate a worldwide air cargo network.…”

“…The data were collected from the CAAC in 2020 ( Civil Aviation Administration of China (CAAC), 2020a , Civil Aviation Administration of China (CAAC), 2020b ). Normally, the CAAC issues two seasonal flight plans a year – the summer timetable (effective from late March to late October) and the winter timetable (effective from late October to late March of the next year) ( Wu et al, 2020 ). The flight plan separates passengers and all-cargo flights.…”

Understanding airline price dispersion in the presence of high-speed rail

“…Airlines, West Airlines, and Lucky Air. Most LCCs have cancelled services in the markets with parallel HSR, suggesting that HSR is a close substitute of the LCC product (Wu et al, 2020).…”

“…Zhang and Lu (2013) and Wang et al (2018) find that China's LCCs have the effect of reducing the airfares and promoting the demand for air travel, but they are not game changers as China's aviation policy is overly protective of the state-owned airlines, and the LCCs do have access to most of the profitable markets Yu et al, 2019;Wu et al, 2020).…”