Hainan Airlines: En Route to Direct Competition?

Abstract

Chen Fang, founder of Hainan Airlines, has grown his business into the fourth-largest airline in China in less than 10 years. Fang faces an environment of strong government controls over routes, prices, and airline expansion--changes initiated in the early 1980s that favor the larger airlines. In the 1990s, an era of rapid growth and change, the government is consolidating the industry into three large groups. In the very near future, the airline must either merge with one of the three largest airlines or change its existing strategy. Should Fang choose to remain independent? If so, how should he compete with the larger players?