Institutional Evolution Of Civil Aviation Regulations In China

Since1970s, countries in Europe and America with large civil aviation industries have reformed their civil aviation regulations one after another. And liberalization of the air transportation market has become an irreversible international trend. Against this background and in the face of external pressure, China’s civil aviation industry has also undergone a series of market-oriented reforms through gradual deregulations. As a result, China has become one of the regions in the world that have seen the fastest growth of the civil aviation industry.The rapid development of China’s civil aviation industry for nearly30years is in large part the result of the regulatory reform, and the manifestation of the institutional bonus. As a basic, leading and strategic industry of the national economy, China’s civil aviation industry is brewing a new wave of development, but is facing the bottleneck of the management and regulation systems. Against this background, an in-depth study of the evolution of deregulation systems of China’s civil aviation and its results since the reform and opening up policy was carried out, and analysis of the impetus, path, evolution logic, and affective factors and constraints of the deregulation institutional change, are significant to the continuous deepening of reform of the regulation systems of the civil aviation industry.Through literature review, this paper summarizes the dynamics theory of institutional change, the process theory of institutional change, the way of institutional changes and institution change affective factor theory, discusses determinants, evaluation standards and test methods of system efficiency, and constructs the theoretical framework for the study of the China’s civil aviation regulation reform from the perspective of transition economics.According to the theoretical framework, this paper reviews the process of institutional evolution of China’s civil aviation regulation since the reform and opening up policy was carried out, which is divided into four stages, and finds out the following five characteristics of the reform:(1) coexistence of progression and lagging behind;(2) coexistence of mandatory and induced changes;(3) coexistence of institutional vacuum and incoordination between systems;(4) path dependence on the old system and exogenous institutional arrangements; and (5) rapid growth of the industry throughout the evolution process.On the basis of constructing the theoretical model of institutional change mechanism, this paper analyzes the impetus, path and evolution logic of the institutional evolution of civil aviation regulations in China, and discusses the main driving forces such as the government interest, system cost and the facilitative effect of the opening-up policy on the reform, outlines the path of the institutional evolution of civil aviation regulations in China, and summarizes the evolution of the regulatory reform from delegating powers and benefits to the competition of interests, the evolution of incremental reform to stock reform, the evolution of the government’s role from the game participant to the rule-maker, and points out the main factors affecting the evolution of regulation system of China’s civil aviation industry-vested interest and the limited rationality of the government.This paper investigates performance of regulatory reform of China’s civil aviation industry, based on the1985-2010time series data of the industry. It analyzes the impact of the regulatory reform on the industry growth, market price, business costs and profitability as well as the quality of service. The results show that:the reform has effectively decreased of market prices; and has a positive impact on the increase of freight volume, but with limited scope; the continuous national economic growth is the source of the rapid development of the industry; deregulation reforms and the introduction of competition have increased the degree of competition in the market, and promoted the quality of service.Finally, In order to resolve the contradictions of the highlighting of the strategic position of China’s civil aviation industry and the incongruence of the institutional mechanisms, and the liberalization of international air transport and in competitiveness of China’s civil aviation industry as a whole, and weakness in sustainable development and innovation of the industry, the following suggestions have been put forward: continue to deepen system reforms, improve the government control system, break the constraints of vested interests, deepen the reform process, coordinate the promotion of supporting reforms in related fields, and ensure the coordination between the economic system and governmental regulation system.