Developing a low-cost airline in a semi-protected regime: Comparing China to Europe and the US

Abstract

The US and Europe have long experienced the expansion of low-cost carriers (LCCs) in the aftermath of extensive aviation liberalisation offering free access to the market for US and European airlines, respectively. More recently, following the opening of the progressive aviation market, China has also emerged as a country that welcomed LCCs to some extent, but has not subscribed to full liberalisation. In this context, our paper compares China's largest LCC, Spring Airlines, to the largest European (Ryanair and EasyJet) and US (Southwest and JetBlue) low-cost airlines. Comparisons in this context include volumes supplied, spatial coverage, network geography and financial results. This comparative study found that Spring Airlines is still a small/emerging LCC compared to the European and US giants and in terms of China's potential market. This is notably due to the lack of whole free access to the market and trunk routes that are still protected to some extent in favour of the Big Three in China. However, Spring uses its production means in an efficient way and generates good financial results, especially compared to those of China's Big Three airlines. Finally, Spring appears to be a composite case rather than a duplicate of a reference LCC.

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

“…This clearly shows that Spring, Lucky and China United deliberately devoted a significant amount of their capacity on the routes that are not served by other airlines. This pattern is similar to that of the major US and European LCCs reported in Dobruszkes and Wang (2019). In contrast, Jiuyuan and West Air's monopoly routes only accounted for 12% and 15% of their total routes, respectively.…”

“…It is also the only commercial airline approved by Air Force to use Beijing Nanyuan Airport (a military air base with civil aviation facilities) as its home airport. Dobruszkes and Wang (2019). In addition, all the degree distributions in Figure 5 clearly follow a power law.…”

“…A number of studies assessed the performance of the largest LCC, Spring Airlines (e.g., Zhang and Lu, 2013;Fu et al, 2015, Jiang et al, 2017. Dobruszkes and Wang (2019) late March of the next year). The OAG data were used in previous studies when studying Chinese LCCs.…”

“…For example, Spring Airlines has been extensively examined by many studies (e.g. Zhang and Lu, 2013;Fu et al, 2015;Jiang et al, 2017;Dobruszkes and Wang, 2019). Other Chinese LCCs receive less attention in scholarly literature but have been mentioned in recent studies such as Liu and Oum (2018).…”

Low cost carriers in the Middle East and North Africa (MENA) region: Emergence and barriers to development

“…For instance, the authors found that a lack of secondary, low cost airports affected the performance of the LCCs in Asia. Dobruszkes and Wang (2019) assessed the scope for LCCs in not fully deregulated regimes. They found that low cost carriers like Spring Airlines in China lack free access to the market as trunk routes are still protected to some extent in favor of the large FSNCs.…”