Relax Controls The Air Transport Industry-competitive Behavior Study

The Airlines industry is a production and serving industry which is characteristic of public services as well as high-tech, high-investment and high-risk. Before 1978, the government regulated the airline's entry, the services criterion, lines and prices strictly, because of worrying about the competitions would destroy this carrying trade. But after 1978, the deregulation has prevailed in the United States, the government has relieved the restrictions on market-entry, management and competition. This tendency led to a revolution in the airlines industry, and some new management theories and competition instruments unknown before have come out.The theory of deregulation is based on the theory of perfect competition and the theory of competitive market. But the later researches found that the theory of competitive market is not consistent with the behaviors of airlines' competition after deregulation. The management methods and competition instruments which are adopted by most old airlines, such as the Hub-Spoke system, revenue management system, frequent travelers programs, code-sharing and the predatory competitions to small airlines, have become the advantages of old companies, and have prevented the competitions from the airlines industry.Now, this thesis attempts to use the theory of principal-agent and the theory of transaction cost, as well as through observing the cost to information, the reaction to rivals' public competitions, principal-agent relations, transaction-specific assets and the cost to transaction, to interpret the competitions of airlines industry from the view of competitive activities that carried out by old companies to face the threats from new entrants.This thesis involves109 Articles. Art. 1 discusses the changes of the history about the regulations of airlines industry. Art. 2 and Art.3 summarizes the theory of regulation and deregulation. In Art. 4, the author tries to use the theory of transaction cost and the theory of principal-agent to explain the behaviors of airlines industry after deregulation, and set forth the viewpoint of this thesis.The Art.54 to Art. 9 describe the airlines competition according to the viewpoint set forth before. Art. 5 discusses the merge and consolidation of airlines industry, and concludes that the merge and consolidation reflect the cost to information, principal-agent, the indivisibility of airlines production, and predatory competition whose purpose is to raise rivals' cost. Art.6 is about vertical network integration, it involves code-sharing and the supervise to agents through CRS. Art.7 analyzes the hub systems, it indicates that the hub systems take advantage of the scale and scope economy, principal-agent relations and the indivisibility of production, at the same time, it restrains the competitions. Art. 8 discusses the several-levels price structure and frequent travelers program in the airlines market, also designs a model of frequent travelers' choice. Art.9 refers to the predatory competition.The last part - Art. 10, puts forward the conclusion of this thesis and tries to give some suggestions to the deregulation policy of Chinese airlines industry.