Borrowing Power from Potential Entrants and High-Speed Rail: Entry Pattern of China’s Low-Cost Carrier

Abstract

This paper investigates the impact of market structure and high-speed rail on China’s low-cost carrier Spring Airlines’ entry patterns during the pre-pandemic period. Dividing the air transport system into discrete distance segments (i.e., short-, medium- and long-haul) helps better reveal critical factors that affect the route entry of Spring. Given the existence of market power in China’s airline industry and the capacity constraints at major airports, Spring strives to enter routes that can accommodate more potential entrants without a strong response from incumbents and are connected with more concentrated or lower-capacity airports. The complementary and competition effects of high-speed rail are well-distinguished in different distance ranges.