Examining competition among airline regarding route portfolios at domestic hubs under government regulation: The case of China's aviation market

Abstract

Numerous studies have explored airline competition on routes, with a limited focus on competition in route portfolios at hub airports. Route control regulations influence this competition. This study proposes a theoretical framework for examining airline competition in route portfolios at regulated hub airports, using the Chinese market as a case. The Chinese market, characterized by strict government regulations, has seen substantial passenger traffic growth. Considering the historical airline network structure as a key evaluation criterion in China's regulations, we examine the impact of airline network structures on this competition. Findings reveal distinct airline network types: Mature, Hub-led, Direct-flight-led, Direct-flight-expansion, Hub-cultivation, and Initial. Mature and Hub-cultivation networks are associated with establishing numerous routes at airports with fewer competitor hubs. However, Mature airlines also dominate airports with significant competitor hubs. Hub-led, Direct-flight-led, and Direct-flight-expansion networks tend to establish many routes at airports with substantial competitor hubs, while Initial networks do not exhibit such competition. Aviation policy and company decisions significantly influence airline competitive positions at hub airports.