A Study On Regulation Reform Performance Of China Civil Aviation Industry Based On The RPSCP Model

At the moment, China is facing a crucial stage where the market directedeconomy system is gradually approaching mature. China’s natural monopolyindustries have become central issues which are accompanied by the deepening ofmarket directed economy system reformation. Civil aviation industry is not only animportant aspect of the national economy, but also to some extent correlates to thenational security. Devote major efforts to developing civil aviation industry is notonly about aviation but also has substantial influences on national and regionaleconomic and social development. Its importance can be seen through the fact that thecentral government had considered it as a basic, strategic and forerunning industry ofthe national economy. Since China had adopted a reform and open policy, civilaviation industry in China had achieved several achievements in respect to breakinggovernment monopoly and bringing in competition. A number of private airlines hadentered the aviation market. Market share for private airlines has grown repeatedlywith these companies growing rapidly in recent years. However, their competitiveability of air route admittance and the arrangement of flight time is still weak.Both theoretical analysis and empirical analysis will be employed in this paperto discuss the process of regulation development and achievement regarding toChina’s civil aviation industry. By using the comparative analysis, the development ofChina’s civil aviation industry and the status quo of government regulation arecompared with the United States and other developed countries. It is found that the there are problems and limitations of industrial organization theory SCP framework inthe research works of China’s civil aviation industrial organization. In combination ofregulation theory and property theory, the RPSCP framework was raised. The reformof government regulation and new industrial organization theory framework arecombined to explain the process of government regulation reform and to examine theachievements of this reform. A regression model was formed by using data from1990to2010of the civil aviation industry by setting regulation, property, structure andother factors as variables. The total amount of transportation, price levels, profitslevels and customer service levels are tested and the summary of results is as thefollowings:（1）The loosen of regulation on civil aviation industry is significantly positivelycorrelated to the total amount of sales, significantly negatively correlated to profit andcustomer service quality. No significant relationship is found between the loosen ofregulation and airfare price.（2）The proportion of government shares in civil aviation is significantlypositively correlated to the total amount of sales, airfare price and profitability,significantly negatively correlated to customer service quality.（3）It is found that there is a significant positive relationship between civilaviation industry concentration and airfare price, a significant negative relationshipbetween civil aviation industry concentration and profitability and customer servicequality, no significant relationship between civil aviation industry concentration andthe total amount of sales.This paper also analyzes other factors that may influence the development ofcivil aviation industry in the current phase of the economic cycle, includingregulation policies, airplane fuel prices, high-speed train and the influence of RMB’s appreciation. There are both opportunities and challenges faced by the civil aviationindustry. At the end of this paper, several suggestions are proposed in consideration ofthe status quo of China’s civil aviation industry: reinforce the policy, improve qualityof regulation; establish proper regulation, develop more advanced competitionmechanism; adjust the industrial structure, enhance property reform; advance theefficiency of network structure, encourage international competition.