Market Conduct of the Three Busiest Airline Routes in China

This paper studies the market conduct of the three busiest routes dominated by the three largest airlines in China. The competition strategies of the three largest Chinese carriers are found to be different from each other. In general, the market behaviour of Air China is consistent with that described in the Cournot solution. Both China Southern Airlines and China Eastern Airlines demonstrate competitive behaviours somewhere between Bertrand and Cournot. However, the former is closer to Cournot, whereas the latter is closer to Bertrand. We also find that the competition among the three carriers becomes more intense over time.