Developing a low-cost airline in a semi-protected regime: Comparing China to Europe and the US. (May 2019) - Dobruszkes, Frédéric
Abstract: The US and Europe have long experienced the expansion of low-cost carriers (LCCs) in the aftermath of extensive aviation liberalisation offering free access to the market for US and European airlines, respectively. More recently, following the opening of the progressive aviation market, China has also emerged as a country that welcomed LCCs to some extent, but has not subscribed to full liberalisation. In this context, our paper compares China's largest LCC, Spring Airlines, to the largest European (Ryanair and EasyJet) and US (Southwest and JetBlue) low-cost airlines. Comparisons in this context include volumes supplied, spatial coverage, network geography and financial results. This comparative study found that Spring Airlines is still a small/emerging LCC compared to the European and US giants and in terms of China's potential market. This is notably due to the lack of whole free access to the market and trunk routes that are still protected to some extent in favour of the Big Three in China. However, Spring uses its production means in an efficient way and generates good financial results, especially compared to those of China's Big Three airlines. Finally, Spring appears to be a composite case rather than a duplicate of a reference LCC. Highlights: Spring Airlines does not have the same freedoms that exist in fully liberalised markets Spring Airlines is the largest Chinese low-cost airline but still smaller than its EU and US cousins Spring's network is a composite case instead of a simple duplicate of leading EU or US low-cost airlines Spring's network is not as compact and dense as the leading EU or US low cost airlines Spring efficiently uses its production means and shows better financial results than China's Big Three airlines