Characteristics of China’s air transport industry

Abstract

This chapter reviews China's domestic and international air transport policy. The introduction of private and low-cost carriers, together with the emergence of HSR, put much competitive pressure on the Chinese state-owned carriers and create momentum for further reforms in China's air transport sector. In the last two decades, relatively liberal air services arrangements have been made with some major markets including the US, ASEAN, Korea, Japan etc. These open and liberal arraignments have given the Chinese carriers the room to grow and the chance to become stronger. They in turn call for further liberalisation moves to allow for their deeper participation in and engagement with international air transport service provisions. Overview of China's economic growth and air transport industryAir travel and economic growth have an intertwined relationship. On the one hand, the demand for air travel depends heavily on economic conditions, resulting in the fact that the air transport industry is extremely cyclical in demand. On the other hand, it is a widely held view that as an input into many economic activities including tourism, trade and investment, air transport has been an important component in achieving economic development and welfare enhancement (Zhang and Findlay 2014). Air transport is particularly important to distant and remote regions where there is no close substitute for this transport mode due to the tyranny of distance. In some parts of the world, air transport is the only viable means of transportation for both goods and people due to geographic or climate constraints (Pagliari 2010). This co-relationship is best reflected by leisure travel, which heavily relies on the increase in disposable income, while at the same time, air transport can substantially contribute to a country's tourism by bringing in tourists and revenues, thereby increasing local residents' disposable income.China has been the second largest aviation market in the world in terms of the volumes of passengers and air cargo moved in its domestic market since 2007. In 2018 the whole industry handled 611.7 million passengers and 7.4 million tonnes of air cargo, representing 10.9% and 4.6% increases from the previous year, respectively. China's airline market is a growing market underpinned by a huge population and rapid economic growth. IATA