Deregulating direct flights across the Taiwan Strait: The transformation of Eastern Asian air transport market and network

Over the past decades Hong Kong has been successfully playing a role as a gateway to China. Since 1988, it has also been the most important hub between Taiwan and China. Over 5 million passengers travelled between Taipei and Hong Kong in 1997, making the link the busiest in the world's international air links and contributing one-sixth of the passengers to Hong Kong airport, which before 1997 had the most international passengers in Asia. In the foreseeable future Taiwan will possibly start some direct services to China; the air link between Hong Kong and Taipei will then compete with many links across Taiwan Strait. These changes may cause the transformation of the market and network structure in eastern Asia. Niches of specific airlines and airports will disappear. This paper examines the issues of possible changes in eastern Asian air transport market: the current market environment, the problems for direct flights across Taiwan Strait, the possible links between Taiwan and China, the future role of Hong Kong, and the market structure in the future.