Determinants of Air Passenger Flows in China and Gravity Model : Deregulation, LCC and High Speed Rail

This paper reviews the development of China's air transport policy and examines the determinants of Chinese city-pair air passenger flows using a gravity model approach accounting for the effects of multilateral resistance. We find enormous positive impacts of both the continuing liberalisation of this industry and the low cost carriers (LCCs) in promoting bilateral traffic flows in China's domestic aviation market. Local industry structures and high-speed rail (HSR) services also influence the volume of passenger movement. The challenge from HSR will be greater in the near future after the fast-expanding HSR network has connected most of the major cities