On The Orientation Of Market Reform In The China's Civil Aviation Industry

Aviation industry is traditionally regarded as a natural monopoly industry which shows characteristics of economics of scope, economics of scale and economics of network. However, along with development of economics and technology ,the industry becomes more and more competitive. Under the wave of deregulation or liberalization towards natural monopoly industries from the 1970s,the development of natural monopoly theory plays an important role.This paper is not only analyse the theory of deregulation in aviation industry but also examines the issue of economic regulation and possible revolution route of civil aviation in china. As part of the infrastructure, civil aviation has been under heavy government regulation, such as entry regulation, price regulation, for a long time. Aviation deregulation means that civil aviation administration loosens or cancels part of all regulation terms. The purpose of deregulation is to promote competition, increase efficiency, allocate resource more reasonably and maximize welfare of society.Nowadays, civil aviation deregulation is a tide around the world. Many governments deregulated or are deregulating their civil aviation. It describes the global civil aviation deregulation movement, and discusses its reasons and effects .China has experienced five revolutions in aviation industry since 1980s,but there are still quite a lot of regulated fields in Chinese civil aviation. The paper points out that it is necessary for China to further deregulation. China has made great progress in marketing reform; civil aviation deregulation in China is feasible too. In particular, this paper discusses the paths of China's civil aviation deregulation, including deregulates admittance of trade, price, flight course, investment aviation apparatus, aviation fuel and other regulation terms. In order to deregulate civil aviation successfully, this paper suggests that CAAC need to push property right reform and amend anti-trust laws. As a remedy measure for mending the market failure due to deregulation, the paper suggests to set up a funds called public service funds to help the remote areas obtain the necessary aviation service.In summary, deregulation of the market-oriented reform will be the future direction of development of CAAC, CAAC also should assume a certain degree of Civil Aviation of public services.