How aviation market is influenced by political policy- the case of Taiwan and China

ABSTRACT

This article seeks to analyse how the aviation market is influenced by political policies. It begins by introducing the background of aviation regulation and the negotiations that have taken place between Taiwan and China over the past decades. It reviews what happened during the past decades, in particular the Cross-Strait Air Transport Agreement reached between Taiwan and China in January 2005. It also highlights the restricting factors of Cross-Strait aviation development and define the problems related to air freedoms. It goes on to measure the dependency degree that Taoyuan Airport relied on Chinese Airports in recent years. Finally, the impact on cross-strait aviation market due to Chinese political policies and the influence on air routes as a consequence of China military drills have been analysed. It concludes that the increased routes of direct flights have attracted Taiwanese passengers to transfer via Chinese airports to the US and Europe. However, the limitation of Chinese passengers to travel to Taiwan since 2019 and the spread of COVID-19 from 2020, destinations of Cross-Strait direct flights have reduced from sixty-one to four. The military drills in August 2022 also severely deteriorated the relation of the two sides. It seems that the development of the Cross-strait aviation market has gone back to the drawing board after fifteen years of success due to the current circumstances. From the case of Taiwan and China, the aviation market is indeed significantly influenced by the political policies. © 2022 Elsevier B.V.. All rights reserved.