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Geographic Patterns of Air Passenger in 1980–1998: Imprints of Economic Growth, Regional Inequality, and Network Development*

Fengjun Jin Chinese Academy of Sciences

Fahui Wang Northern Illinois University

Yu Liu Chinese Academy of Sciences

This research analyzes the geographic patterns of domestic air passenger from 1980 to 1998, with three foci: (1) impacts of economic reforms, (2) regional inequality in air transport development, and (3) network development. Accessibility to air transport improved significantly as China expanded its air transport system, 1980–1998. The dominance of major declined as the air transport system expanded to medium and small cities. The centroid of passenger volume migrated toward southeast, consistent with the expansion of economic growth in southeast coastal areas. The rule of distance decay in air traffic was more applicable to China in 1998 than in 1985 as the market economy worked its way into China’s air transport system. The East Region had a much higher share of air passengers than its share of population and GDP, followed by the West and the Middle Regions, reflecting an interesting ‘‘flyover’’ effect. By 1998, a hub-and-spoke air transport system was clearly in place in China. Key Words: air transport geography, China, regional inequality, flyover effect, hub- and-spoke system.

uch of the literature of air transport ge- ture of the -Pacific rim’s air transport sys- Mography has focused on developed coun- tem in conjunction with its telecommunication tries and is particularly rich in studies on system; Akpoghomeh (1999) examined the his- impacts of deregulation in the U.S. torical development of air transportation in and air transport liberalization in Europe Nigeria; and Bowen (2000) studied the accessi- in the past two decades (e.g., Dempsey and Go- bility of international air transport in major etz 1992; Graham 1995, 107–68; Goetz and hubs of Southeast Asia. Very little is reported Sutton 1997; Goetz 2002). Among studies on on air transport in China, which is predicted to developing countries, Bowen and Leinbach be the world’s fastest growing aviation market (1995) discussed the important role played by with an increase of passengers from 69.6 million the state in airline liberalization in newly in- in 1999 to an estimated 214.7 million by 2014 dustrialized East Asian countries; O’Connor (Granitsas 2002). (1995) reviewed the historical development of Since China launched its economic reforms air transport network in Southeast Asia; Hooper in 1978, the centrally planned economy has (1997, 1998) analyzed the experience and pros- gradually been transformed to a free market pect of airline competition and deregulation in economy. How has this transition affected its ; Rimmer (1999) analyzed the spatial struc- air transport industry, particularly air passenger

* The first author would like to acknowledge financial supports from the National Natural Science Foundation of China (Grant No. 49871026) and the Key Projects of Knowledge Innovation of the Chinese Academy of Sciences (Grant No. KXCX2-307-01). The second author is grateful for a travel grant from the Chinese Academy of Sciences. We thank two anonymous reviewers and Truman A. Hartshorn for valuable comments. Points of view or opinions in this article are those of the authors alone. Correspondence or request for reprints should be directed to Fahui Wang at [email protected]. The Professional Geographer, 56(4) 2004, pages 471–487 r Copyright 2004 by Association of American Geographers. Initial submission, July 2002; revised submission, December 2002; final acceptance, May 2003. Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, and 9600 Garsington , Oxford OX4 2DQ, U.K. 472 Volume 56, Number 4, November 2004 transport, for more than two decades? How has tionship with economic growth, and, finally, economic growth affected the development of examines the impacts of an expanded air trans- air transport in China? Does China also con- system on accessibility to air transport form to some findings obtained from air trans- services in China. port studies in Western countries, such as the relationship between the growth of air transport Brief ’s and GDP,average distance of , distance Pre-PRC Era (1920–1949) As early as 1910, decay in passenger volume, and formation of a a Chinese American, Feng Ru made the first hub-and-spoke system? What are the regional airplane in China in Nanyuan, . Soon patterns of air transport in China, and how are after that, airplanes were used for military pur- the patterns related to regional economic activ- poses in China. The first commercial flight was ity patterns? made between Beijing and in 1920. Civil This article reports the results of our preliminary aviation did not make any significant develop- analysis of China’s air passenger transport from ment until the end of First Civil War (the 1980 to 1998. Air transport data in 1980 (short- ‘‘Northern Expedition War’’) in 1927. In 1929, ly after the 1978 economic reforms) were the the central government established the Shang- earliest data available, and data in 1998 were hai- Aviation Administration Bureau the most recent data available to us. All data and placed much emphasis on building China’s were from the Yearbook House of China Trans- commercial . By 1933, there were three portation and Communication (1981–1999). major domestic airlines in China: the China Air transport data in China were not as Airlines (a joint venture with a U.S. company), complete as the passenger data, and thus were the Eurasian Airlines (with a German com- not covered by this study. Air passenger data by pany), and the Southwest Airlines (with local different airlines were incomplete, and data of business groups in ). By 1936, comprehensive air ticket prices were not yet before the Japanese invasion, the air transport available to the public. These data limitations network had expanded nationwide, covering prevented this study from examining impacts of major cities except for . Com- deregulation and privatization in China’s air- mercial air passenger transport in China was lines in depth. halted during the War of Resistance Against This research analyzes the geographic pat- (1937–1945) and the Second Civil War terns of domestic air passenger transport in (the ‘‘Liberation War’’ 1945–1949). China 1980–1998 with three foci: impacts of Pre-Reform Era (1949–1978) economic reforms, regional inequality, and net- Shortly after work development. Specifically, the article has the founding of People’s Republic of China four objectives: (PRC) in 1949, the Civil Aviation Administra- tion of China (CAAC) was established. It oper- (1) Providing an overview of the growth in ated under the Central Military Commission till numbers of air passengers and the expansion 1954. Even after 1954, the bureau continued to of the air transport system in China operate in a semi-military style as a branch office (2) Examining the structural and location of the air force. Following the Soviet aviation change of the air transport system by ter- system, the CAAC was responsible for planning, minal passengers handled annually building, and operating airports and airlines as a (3) Analyzing the spatial patterns of air traffic whole. The air transport system was primarily flows between cities built to link the capital city, Beijing, and other (4) Studying the formation of China’s hub-and- cities serving government officials and military spoke system by the dominant flow method personnel. The (1966– 1976) further damaged the system with only minimum air passenger and freight transport Overview of Air Transport in China activity. This section begins with a brief introduction to Postreform Era (1978–present) The eco- China’s civil aviation history (also see Liu 2000, nomic reforms since 1978 have brought pro- 8–10), then discusses the rapid growth of air found changes to China, including to civil passengers in the postreform era and its rela- aviation. In 1980, the CAAC became independ- Geographic Patterns of Air Passenger Transport in China 1980–1998 473 ent from military control and assumed its pri- ranked no. 4 with assets of 15 billion RMB after mary responsibility of promoting civil aviation the Big Three. It attracted investment from the in China. In the 1980s, the CAAC implemented and through public stock offer- various reform measures including: separating ings in China and made several acquisitions managements of airlines and airports from the and mergers during 2000–2001. The other is CAAC central office, transforming airlines to the Airlines, which made a successful profit-driven business entities, and allowing lo- public stock offering in 2002 and currently cal governments to operate their own airlines holds a 30 percent market share in transporting and encouraging competition. Prior to the air- passengers originating in Shanghai. The cur- lines consolidation in 2002, there were more rent airline industry in China is still heavily than two dozen airlines with fewer than 600 regulated, but it is undergoing both privatiza- airplanes in service in China serving fragmented tion and deregulation. markets (see Table1). Airlines rarely made prof- This postreform era was characterized by fast its in this period and piled up large debts. In growth in air passengers and will be examined in order to take advantage of scale economies and detail in the remaining sections of this article. improve services, the CAAC designed a consol- idation plan for all state-owned airlines. On Increase of Air Passengers versus 11 October 2002, three big airline groups (Air Economic Growth China, China Eastern, and China Southern), Air passengers in China increased rapidly after known as the Big Three, and three airline serv- 1980. Using the 1980 numbers as the baseline, ice groups (one in information technology, one Figure 1 shows that growth of air passengers in fuel supply, and one in mechanic part sup- outpaced that of GDP and certainly that of plies) were officially formed. Each of the Big population. The GDP data were from the Chi- Three was structured with one major airline, na State Statistics Bureau (1981–1999) and were whose name it inherited, as its core. Each was measured by the 1998 constant price. Thus, based in one major hub with a combined market they were comparable over time. During 1980– share of about 80 percent of passengers handled 1998, the GDP grew with an annual rate of in China (see Table 2). 10.82 percent, whereas air passengers grew with Two regional airlines deserve some discus- an annual rate of 16.96 percent. In other words, sion as they often serve as the ‘‘poster children’’ 1 percent growth in GDP corresponded to an for the success of experimental deregulation and average of 1.57 percent increase in air passen- privatization in China’s airline industry. One is gers in China.1 the Airlines, founded in 1993 with an Air transport is a high-cost transporta- initial investment of 10 million RMB from the tion mode, and its growth has been driven by Hainan provincial government, but currently two principal factors: growing affluence and

Table 1 Market Shares of Airlines Prior to Consolidation

Airlines Type Market Share in Percentage

Cargo (tonne-km handled) Passengers

Air China Major 24.49 12.35 China Eastern Major 16.81 13.78 China Southern Major 21.49 25.41 China Southwest National 5.57 7.12 China Northern National 6.00 7.36 China Northwest National 3.66 4.58 China Airlines Regional 4.06 5.05 Regional 2.81 4.96 Regional 5.83 4.41 Airlines Regional 2.61 2.27 Airlines Regional 1.46 2.11 China Airlines Regional 1.19 2.09 Airlines Regional 1.1 2.03 Other Airlines1 Regional 2.92 6.48

1Other airlines include Air Great Wall, CNAC Zhejiang, China Xinhua, , Changan and Shanxi Airlines. Data source: Statistical data on Civil Aviation of China 2002. 474 Volume 56, Number 4, November 2004

Table 2 China’s Big Three Airline Groups in 2002

Air China China Eastern China Southern

Headquarter and major hub Beijing Shanghai Acquired airlines CNAC1, China Southwest, China Northwest, China Northern, CNAC Zhejiang China Yunnan China Xinjiang Assets (in billion RMB) 56.05 47.30 50.10 No. employees 20,325 25,109 34,089 Airplanes in service 118 118 180 Flight routes 339 437 606 (Domestic in parentheses) (286) (383) (512)

1CNAC stands for China National Aviation Corporation. Compiled from news at the CAAC (Civil Aviation Administration of China) web site at http://www.caac.cn.net/ztbd/merge/1.htm (data as on October 11, 2002). government policies such as deregulation, lib- airlines lost money and went bankrupt. In order eralization, privatization, and encouragement to make airlines more sustainable, the CAAC of competition, all of which are intended to im- abandoned some of the deregulation initiatives prove services and drive prices down (Graham and instructed airlines to raise air ticket prices, 2000, 311). Air passenger travel in China grew at causing a slowdown in air passenger growth in an impressive annual rate above 16 percent the late 1990s. For example, ticket prices in the throughout 1980–1997, but slowed down to Xinjiang Airlines averaged 0.19–0.23 f/km in below 10 percent in 1997–1998. Initial fast 1990 and 0.21–0.28 f/km in 1993, and increased growth in the 1980s was attributed to fast eco- to 0.44–1.02 f/km in 1996 (significantly out- nomic growth following the economic reforms pacing inflation rates) (Dali Li 1998, 55). The and a low base value of air passengers prior to air transport slowdown in the late 1990s was the reforms. Income increases also helped air also attributable to China’s economic restruc- transport gain market share relative to other turing since 1997 (Liu 2000, 10) and intensive transportation modes, as more people (includ- competition from other transportation modes ing tourists) were willing to pay more for short- such as railways with improved services and er travel times ( Jin et al. 1997). Continued rapid speeds (Lu et al. 2000, 86; Du Li 1997, 14) and a growth until 1997 can be credited to deregula- national trunk system near completion tion and privatization in China’s airlines in the by the middle 1990s (S. Li and Shum 2001). early 1990s, which led to a rapid increase in air- lines (as many as thirty-four companies in air Improved Accessibility in an Expanded Air passenger transport and nineteen in general Transport System aviation at one time) and cheaper air ticket pric- Along with the growth of air passenger traffic, es (due to stiff competition). Much like the early the number of cities with airports in service for experience of U.S. airline deregulation (Taaffe, commercial passenger flights almost doubled Gauthier, and O’Kelly 1996, 143–55), many from 69 in 1980 to 137 in 1998 (see Figures 2 and 3).2 Traffic volumes in most cities in 1998 19 were more than ten times those of 1980. Among 17 Air Passengers the sixty-eight cities with newly opened airports 15 Population during the period 1980–1998, the most notice- GDP 13 able were those in four coastal cities: Shenzhen 11 and ranked among the top ten airports, 9 and and ranked among the 7 top thirty airports in 1998 (all above the mark of 1980 Level as 1 5 a million passengers). Shenzhen and Xiamen 3 were two of the ‘‘Special Economic Zone 1 Cities’’; and Wenzhou and Ningbo enjoyed 1980 1985 1990 1995 2000 the status of ‘‘Designated Coastal Open Cit- Year ies’’—all with favorable taxation and trade pol- Figure 1 Growth of population, GDP, and air pas- icies to attract foreign investment and foreign sengers in China 1980–1998. trades.3 These four cities were among the fastest Geographic Patterns of Air Passenger Transport in China 1980–1998 475

Urumuqi

Beijing

Xi’an

Chengdu Wuhan Shanghai

Chongqing

730 - 10,000 10,001 - 100,000 100,001 - 250,000 Guangzhou 250,001 - 500,000

500,001 - 1,500,000 0 1,000 Kilometers

Figure 2 Air passengers handled by cities in China 1980. growing economies in China in the era of eco- units were within 100 and 150 km of an nomic reforms. Benefiting from its unique ge- in 1980, respectively; but in 1998 the numbers ographic location as Kong’s closest improved to 58.56 percent and 81.58 percent, neighbor, Shenzhen has been the top econom- respectively. The average distance between ic performer since the central government des- county units and the nearest airports also ignated it as a Special Economic Zone in 1979. dropped from 140.14 km in 1980 to 101.59 By 1998, Shenzhen ranked no. 5 in air passen- km in 1998. Improvements in accessibility also gers handled. included more routes between cities and higher Utilizing the China County-Level GIS Data frequencies of flights. For instance, based on (maintained by the Socioeconomic Data and the data reported in Xu (1986, covering the Applications Center [SEDAC] of the Center for period 1950–1985) and data compiled by International Earth Science Information Net- the authors (covering the period 1990–2000), work [CIESIN] at http://sedac.ciesin.colum- annual growth rates in the number of routes and bia.edu/china/), we computed the distances in the number of flights was 10.36 percent and between the centroids of county units4 and the 16.58 percent, respectively, outpacing the an- nearest airports in service in order to examine nual growth rate in the number of airports (3.92 accessibility to the air transport system. Based percent) during 1980–1998. In summary, acces- on the distance matrix, we compiled Table 3. sibility to air transport services had improved Only 35.18 percent and 61.35 percent of county significantly in China during the study period. 476 Volume 56, Number 4, November 2004

Urumuqi

Beijing

Xi’an

Shanghai Chengdu Wuhan

165 - 100,000

100,001 - 1,000,000 Kunming Xiamen

1,000,001 - 2,500,000 Shenzhen Guangzhou 2,500,001 - 5,000,000

5,000,001 - 17,516,960 0 1,000 Kilometers

Figure 3 Air passengers handled by cities in China 1998.

Structural and Location Changes hai, and Guangzhou remained the top three of Air Transport System cities throughout the period, 1980–1998. Among the three, Shanghai gained the fastest Declining Dominance of Major Airports growth in air traffic due to the economic pros- Table 4 lists the top fifteen cities in 1980 and perity of the region ( particularly the 1998 by air passenger volumes. Beijing, Shang- River Delta) in the era of economic reforms.

Table 3 Counties Served by the Nearest Airports 1980–1998

Distance from Nearest Airport (km) Counties Served in 1980 Counties Served in 1998

Number Percentage Number Percentage

100 871 35.18 1,450 58.56 150 1,519 61.35 2,020 81.58 200 2,018 81.50 2,245 90.67 250 2,267 91.56 2,367 95.60 300 2,361 95.36 2,424 97.90 Average distance 140.14 km 101.59 km Geographic Patterns of Air Passenger Transport in China 1980–1998 477

Table 4 China’s Top 15 Cities in Air Passenger Volumes 1980 versus 1998

City Name Region 1980 1998 1998 Vol./1980 Vol.

Rank Passengers Rank Passengers

Beijing East 2 1,188,630 1 17,516,960 14.74 Shanghai East 3 620,783 2 13,707,093 22.08 Guangzhou East 1 1,313,738 3 12,412,400 9.45 Kunming West 7 189,886 4 5,150,356 27.12 Shenzhen* East n/a 5 4,924,650 n/a Chengdu West 4 310,257 6 4,389,987 14.15 Xiamen* East n/a 7 3,495,569 n/a Haikou East 17 87,581 8 3,292,690 37.60 Xi’an West 6 220,101 9 2,860,351 13.00 Wuhan Middle 11 129,358 10 2,639,545 20.40 West 10 136,679 11 2,352,535 17.21 East 14 114,081 12 2,275,750 19.95 East 24 38,174 13 2,137,816 56.00 * East 30 29,970 14 2,116,693 70.63 East 13 117,411 15 2,108,030 17.95 Shenyang East 8 149,691 16 2,046,207 13.67 Guilin* East 5 229,162 18 1,845,466 8.05 Urumqi West 9 142,309 23 1,274,375 8.95 * East 12 124,589 24 1,255,964 10.08 West 15 107,245 36 528,724 4.93 Top 3 out of total (%) 49.98 38.36 Top 15 out of total (%) 81.52 71.54

Note: *indicates cities that are not provincial capitals.

Growth of air passengers in Guangzhou was rela- Frankena (1978). The results are: tively slow since some of the air traffic was diverted to its neighboring city Shenzhen (only P1 ¼ 1; 491; 954 and q ¼0:9911 in 1980 about 1.5 hours from Guangzhou through an 2 express highway and 1.3 hours by an express ðR ¼ 0:92; n ¼ 69Þ; and railway). The top three cities together account- P1 ¼ 20; 118; 364 and q ¼0:8894 in 1998 ed for about 50 percent of total air passengers in 1980 but only 38 percent in 1998. Similarly, the ðR2 ¼ 0:93; n ¼ 136Þ: percentage of total air traffic at the top fifteen cities dropped from 81.52 in 1980 to 71.54 in Note that P1 in both years were only slight- 1998. Lower percentages of air traffic at major ly larger than the actual numbers of air passen- airports indicated rising roles of medium and gers handled by the first-ranked city, that is, small airports, moving toward a more balanced 1,313,738 in Guangzhou in 1980 and 17,516,960 national air transport system in China. in Beijing in 1998. The increase of P1 over time One may use the rank-size model (Zipf 1949) reflects overall growth in the air transport sys- to examine the statistical distribution of air pas- tem. The drop in parameter q (in absolute value) senger volumes (Murayama 1982). The model is indicates a flattening gradient over time, and thus written as declining dominance of top airports over time. q P ¼ P1r ð1Þ where P is the number of air passengers in a city, Rising Roles of Nonpolitical Centers r is its corresponding rank, and P1 and q are From Table4, among the top fifteen cities in air constants to be determined by a regression. traffic, most were provincial capitals. Being the We used a nonlinear ordinary least square capital of a province where most government (OLS) regression, instead of a linear OLS re- officials lived, it possessed great administrative gression on the log-transformation of Equation power to channel investment in its favor under (1), to estimate the rank-size model. See a dis- decades of a central planning system. In 1980, cussion on the differences between them in only two cities (the tourist city Guilin and the 478 Volume 56, Number 4, November 2004 port city Shantou) were not provincial capitals Figure 4. Both were based on provincial units,5 among the top fifteen. In 1998, among the five which were the best data available for the study cities rising to the top fifteen, three cities period on a consistent basis (China State Sta- (Shenzhen, Xiamen, and Dalian) were not pro- tistics Bureau 1981–1999). The GDP was vincial capitals. All three were on the east coast, based on the 1998 price level and thus compa- and were early beneficiaries of China’s econom- rable over time. Throughout 1980–1998, both ic reform and open door policies. the centroids of population and GDP were lo- To examine the issue systematically, we clas- cated in Henan Province, the northern neigh- sified cities into four categories: (1) provincial bor of . While the population centroid capitals, (2) cities mainly supported by indus- migrated only slightly toward the southwest, tries and trades as ‘‘economic-trade centers,’’ (3) the economic centroid moved significantly cities with tourism generating the majority of southward and also slightly eastward. In other revenues as ‘‘tourist centers,’’ and (4) remaining words, economies in , particularly cities as ‘‘others’’ ( Jin 2001). Based on the clas- the four coastal provinces, Guangzhou, Fujian, sification, we compiled Table 5, which shows Zhejiang, and south , grew faster than how the share of total air passengers in provin- the rest of the country. In general, the migration cial capitals gradually declined from 87.56 per- of air transport centroid has been consistent cent in 1980 to 76.24 percent in 1998; and the with the trend of economic centroid movement. share in cities of economic trade centers steadily increased from a negligible 3.48 percent in 1980 to 17.31 percent in 1998. Provincial capital cit- Analysis of Air Traffic Flows ies remained dominant in air transport, but their dominance declined. As economic, trade, or Air traffic flow data in 1980 were not available, tourist centers (particularly in coastal areas) and analyses in this section and the next section opened their airports or expanded existing ones, were based on the data in 1985 and 1998. In it became evident that these cities gained higher 1985, air passenger flows between 104 city pairs shares in total passenger volume. with annual volumes near or above 1,000 were selected for the study in this section. In 1998, air Migrating Air Transport Centroid passenger flows between 247 city pairs with an- toward Southeast nual volumes near or above 50,000 were select- With the assistance of GIS, we computed the air ed for the study in this section. The selected transport centroid based on the airport loca- records accounted for nearly 90 percent of all tions and their corresponding air passenger vol- traffic. This section discusses the average air umes (see Figure 4). The air transport centroid travel distance, examines applicability of the in 1980 was located in north Hubei Province, distance decay rule in China, and analyzes re- about 250 km northwest of its capital city gional inequality in air transport development. Wuhan. Since then, it has gradually moved to- ward the southeast (though the 1998 centroid retreated back toward its 1990 location). The Average Air Travel Distance general trend of movement reflected increasing Based on the air passenger flow data, the average shares of air traffic in coastal cities, particularly distance for domestic air travels in China was in the southeast. 1,191 km (740.09 mi) in 1985 and 1,193 km We also computed the centroids of popula- (741.33 mi) in 1998, indicating very little tion and GDP in corresponding years, shown in change. Based on data from the U.S. Bureau of

Table 5 Percentages of Air Passengers in Various Cities by Functions 1980–1998

1980 1985 1990 1995 1998

Provincial capitals 87.56 89.18 82.64 77.20 76.24 Economic-Trade 3.48 3.47 9.90 17.27 17.31 Tourist 3.74 5.54 5.17 3.36 4.21 Others 5.22 1.81 2.28 2.17 2.24 Total 100.00 100.00 100.00 100.00 100.00 Geographic Patterns of Air Passenger Transport in China 1980–1998 479

Zhengzhou

80

Henan 85 90

80 95 98 98

85

80

98 95 Hubei 90

Wuhan 0 100 Kilometers GDP Centroid Population Centroid Air Transport Centroid Provincial Boundary

Figure 4 China’s population, economic, and air transport centroids 1980–1998.

Transportation Statistics (1997, 210–11), the travel distances in the two countries were strik- average distance for all domestic air travel in ingly close. the U.S. was 742.66 miles in 1980 and increased Figure 5 shows that most air passengers slightly to 792.05 miles in 1995. The average air traveled 500–2,000 km in China in 1998 (90 480 Volume 56, Number 4, November 2004

12 100

11 90 10 80 9 70 8

7 Distribution % 60 Cumulative % 6 50

5 40 Cumulative % Distribution % 4 30 3 20 2

1 10

0 0 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 3,200 3,400 3,600 3,800 4,000 Distance (km) Figure 5 Distribution of air passengers by distances traveled in China. percent of passengers traveled below 2,000 km). was only 0.086 (n ¼ 104), indicating a very weak On the one side, spatial interaction (in terms of fitting power of Model (3), while the R2 for 1998 air traffic) declines with distance (see a more was 0.233 (n ¼ 247).6 The poor fitting power rigorous examination below). On the other, air of equation (3) in 1985 indicates that the rule of transport becomes attractive only beyond a cer- distance decay in air traffic did not apply to tain distance in comparison to surface trans- China in 1985 as China was still largely oper- such as railways or ( Jin et al. 1997). ating in a nonmarket economic system. It was more applicable in 1998 as the market economy Distance Decay in Air Traffic took a more prominent role. In the meantime, Distance decay in air traffic can be assessed by a the expanded airport system with more airports simple gravity model such as: open for service enabled people to make short- T ¼ kO D db ð2Þ distance trips and moved closer to a complete air ij i j ij transport system. where Tij is the number of air passengers between However, Equation (3) is merely a descrip- cities i and j, Oi is the number of total air pas- tion of traffic flow pattern with respect to travel sengers generated at i, Dj is the number of total distance and does not explain how air traffic is air passengers at j, dij is the distance between generated. A different form of gravity model them, b is the distance friction coefficient (usu- is often used to explain how traffic is affected ally a negative number) and k is a constant (Ta- by attractions at the origin and destination cities affe, Gauthier, and O’Kelly 1996, 239). In order in addition to the distance effect: to focus on the distance decay effect, reorganiz- b ing (2) and taking logarithms on both sides yield: ¼ a b ð4Þ ÂÃÀÁ Tij kAi Bj dij ln Tij= OiDj ¼ ln k þ b lnðdijÞð3Þ where Ai and Bj are attractions at the origin and A simple bivariate regression based on (3) destination cities respectively, a and b are con- yielded b ¼0.573 in 1985 and b ¼0.792 in stants, and other notations have the same inter- 1998. Note that R2 in the regression for 1985 pretations as in (3) (see Curry 1972; for more Geographic Patterns of Air Passenger Transport in China 1980–1998 481 advanced gravity models, see Fotheringham and model (II) in 1998. More importantly, the mod- O’Kelly 1989). A log-transformation is often el has a negative distance friction coefficient b in used to calibrate the parameters in (4): 1998, which is statistically significant. That is to ÀÁ ÀÁ say, China’s air traffic pattern in 1998 basically ln Tij ¼ c þ a lnÀÁðÞþAi b ln Bj þ b ln d ð5Þ fits the gravity model that is widely observed ij in Western countries. Model (IV) with added Equation (5) served as the base model for our dummy variables will be explained below. analysis when population sizes at the origin anddestinationcitieswereusedtomeasureAi and Regional Inequality in Air Transport Bj. Data of population and average wages in cities were extracted from the Urban Statistical and the ‘‘Flyover Effect’’ Yearbook of China (China State Statistics Bureau China is traditionally divided into three re- 1986, 1999). Models (I) and (II) in Table6 show gions—East, Middle, and West, based on geo- regression results for the base model in 1985 graphic location, distinct natural environments, and 1998, respectively. Note that the distance population distribution, and economic devel- friction coefficient b was positive in 1985, pro- opment patterns. The ‘‘three-region’’ terminol- viding even stronger evidence that the law of ogy has been widely used in academic textbooks, distance decay did not apply to China in 1985. statistical reports, and government policy state- Measurements of Ai and Bj in Equation (5) ments (see Figure 6). Table 7 presents the per- can be improved by using total incomes (i.e., centages of population, GDP,and air passengers population multiplied by average income) in- in three regions. Two observations may be made stead of population sizes of the two cities. Due from Table 7: to lack of income data in China, average wage figures were used as a proxy for average income (1) Most importantly, the East Region domi- in each city in 1998 (Wang 2002, 238). The nated the air passenger transport with a model with Ai and Bj measured by total incomes higher share in air passengers (71.34 per- is thus referred to as the ‘‘income-adjusted cent in 1998) than its shares in population model.’’ Data for average wages in cities were (41.16 percent in 1998) and in GDP (58.20 not available in 1985, and thus the income- percent) would suggest. In addition, its adjusted model could not be calibrated for dominance was further strengthened dur- 1985. Table 6 shows an improved R2 by the in- ing 1980–1998 ( from 67.91percent in 1980 come-adjusted models (III) compared to the base to 71.34 percent in 1998).

Table 6 Regression Results of Gravity Models for Air Traffic Flows 1985 and 1998

Coefficient 1998 (n ¼ 247) 1985 (n ¼ 105) (I) Base Model (II) Base Model (III) Income-Adjusted (IV) Income-Adjusted plus Dummy Var.

Intercept 3.9214** 9.6885*** 3.0827*** 3.5227*** (2.64) (16.82) (3.44) (3.51) ln(Ai) 0.1600** 0.3880*** 0.3995*** 0.3902*** (2.76) (8.81) (11.06) (10.29) ln(Bj) 0.1162 0.2785*** 0.3307*** 0.33277*** (1.04) (5.76) (7.90) (7.89) ln(dij) 0.6388** 0.1364 0.1836* 0.2100** (2.96) (1.63) (2.35) (2.66) X1 0.3024* (2.59) X2 0.0188 (0.87)

Y1 0.2990** (2.79) Y2 0.0312 (0.31) R2 0.182 0.279 0.373 0.410

Notes: *indicates significant at 0.05; **indicates significant at 0.01; and ***indicates significant at 0.001; t-values in parentheses. 482 Volume 56, Number 4, November 2004

,

Figure 6 Three regions and provincial units in China

(2) Table 7 shows that cities in the Middle Re- may wonder whether regional boundaries cre- gion accounted for 8.97 percent and 10.34 ate any barrier for air transport. The question percent air passengers in 1980 and 1998, is particularly relevant in China since the central respectively, with over one-third of the pop- government has clearly stated and enforced ulation and about 30 percent GDP in both different policies for each region. We examine years. It is clear that the Middle Region this issue by adding some dummy variables lagged behind the East and West in air to the right-hand side of Equation (5). Two bi- transport development.7 nary dummy variables are sufficient to code three regions; thus four variables are used to Given the physical, cultural, and socioeco- code the regions where the origin city is located nomic differences among the three regions, one (X1 and X2) and where the destination city

Table 7 Percentages of Population, GDP, and Air Passengers by Regions in 1980 and 1998

Regions Air Passengers Population GDP

1980 1998 1980 1998 1980 1998

East 67.91 71.34 41.06 41.16 50.08 58.20 Middle 8.97 10.34 35.80 35.73 32.22 27.86 West 23.12 18.32 23.14 23.11 17.70 13.94 Total 100.00 100.00 100.00 100.00 100.00 100.00 Geographic Patterns of Air Passenger Transport in China 1980–1998 483 is located (Y1 and Y2). The new regression governmental employees, which account for model is the largest group among air passengers in the ÀÁ ÀÁ ÀÁ West.9 The central government also recognizes ln Tij ¼ c þ a lnðÞþAi b ln Bj þ b ln dij that maintaining strong, fast, and efficient air þ k1X1 þ k2X2 þ l1Y1 þ l2Y2 ð6Þ transport links in the West and between the West and the rest of the country is vital to where the political stability of China and to the eco- 10 (1) X1 ¼ 0 and X2 ¼ 0 if the origin city is in the nomic development of the West. East Region; Y1 ¼ 0 and Y2 ¼ 0 if the desti- nation city is in the East Region; (2) X1 ¼ 1 and X2 ¼ 0 if the origin city is in Development of a Hub-and-Spoke the Middle Region; Y1 ¼ 1 and Y2 ¼ 0 if the Air Transport System in China destination city is in the Middle Region; and (3) X1 ¼ 0 and X2 ¼ 1 if the origin city is in the This section uses the method of dominant flow West Region; Y1 ¼ 0 and Y2 ¼ 1 if the des- analysis to examine the network structure of tination city is in the West Region. China’s air transport system. Among flows be- tween one particular city and all other cities, the The coefficients k1, k2, l1, and l2 and their dominant flow analysis identifies only the larg- corresponding t-values show whether the air est flow from/to this city. In formula (Zhang passenger volumes were significantly different et al. 1992, 51–67),  in the three regions after attractions in origin Tij þ Tji and destination cities and distances were con- Lik ¼ max ; for j ¼ 1; 2; ...;n ð7Þ trolled for. Oi þ Di Since the gravity model did not apply to Chi- where Tij and Tji are air traffic flows from city i to na in 1985, only the 1998 regression based on j and from j to i respectively, Oi and Di are total Equation (6) (with Ai and Bj measured by total air passengers from and to city i respectively, incomes) is presented as in Model (IV) in Table and Lik is the dominant flow ratio at city i. 6. Note that k1 and l1 were negative and statis- Among many linkages between i and j ( j ¼ 1, 2, tically significant while k2 and l2 were not sta- ...,n), the linkage i ! k is called the ‘‘priority tistically significant. That is to say, cities in the linkage,’’ and the flow on this linkage is the Middle Region had generated fewer air passen- dominant flow. gers as predicted by the gravity model than Applying Equation (7) to the air passenger those in the East; but the difference between the flow data in 1985 and 1998, it is observed that West and East Regions was not statistically sig- Lik was generally low for a large city that main- nificant. In other words, everything being equal tained linkages with many cities, and that Lik (population, income, distance), more air pas- tended to be high for a medium or small city that sengers were generated by cities in the East or had flights linking with only a few cities. West Region than those in the Middle, indicat- Figures 7 and 8 display all dominant flows ing less favorable conditions for the Middle in in China’s air transport system in 1985 (among air transport. This phenomenon is character- 233 flight routes) and 1998 (among 983 flight ized as ‘‘flyover effect.’’8 routes), respectively. A city with a large number Although the West Region in China, with of priority linkages (i.e., many dominant flows sparse population and economic activities, is from smaller cities toward this city) usually unlike the West Coast of the U.S., its geograph- serves as a major hub in the system. In 1985, ic location is similarly favorable for air transport twenty-three cities had priority linkages with development (e.g., on the periphery and thus Beijing (and twenty other cities linked with Be- favored by long-distance travelers). Further- ijing through two priority linkages). Clearly, more, air transport is especially important in Beijing was the most important hub in 1985. In areas where surface are poor and ex- the same year, only eight cities had priority pensive (Hoyle 1988), which is more so in West linkages with Guangzhou, despite the highest China than in the Middle or East. Finally, given air passenger volume handled there, and five its relatively smaller base population, the West cities had priority linkages with Shanghai. perhaps has the highest share of labor force of Urumqi, with priority linkages to ten cities in 484 Volume 56, Number 4, November 2004

Figure 7 Dominant air passenger flows in China 1985.

1985, was the regional hub in Xinjiang. From Kunming). Urumuqi, Xi’an, and Chengdu all Figures 7 and 8, we can also see the evolution of had dominant flows toward Beijing, and thus a hub-and-spoke air transport system from 1985 their networks can be considered as subsystems to 1998 in China. In 1998, Beijing had priority of Beijing. Kunming was the regional hub for linkages with twenty-eight cities, and Guang- a relatively isolated subsystem in southwest zhou with thirty-three. Both cities spread their China. networks across the East, Middle, and West re- gions, and were clearly national hubs. Despite its economic power, Shanghai had priority link- Summary and Future Work ages with only seven cities in 1998. Shanghai’s Based on data from the China Transportation and network in terms of dominant flows did not Communication Yearbooks, this research analyzed go beyond four coastal provinces (Shandong, the geographic patterns of domestic air passen- Jiangsu, Zhejinag, and Fujian). Its role in Chi- ger transport in China in 1980–1998. Major na’s domestic air transport remained limited in findings are summarized as follows: terms of spatial ranges. However, these four provinces were among the fastest growing econ- 1. During 1980–1998, China’s air passenger omies in China, supporting a high air traffic volume grew at an impressive average annual volume in Shanghai. Shanghai also played a growth rate of nearly 17 percent, outpacing prominent role in China in its international air the growth of GDP, but growth slowed down transport, which is not included in this study. recently because of higher ticket prices and in- Figure 8 also shows four regional hubs in the creasing competition from railways and high- West Region (Urumuqi, Xi’an, Chengdu, and ways. As the air transport system expanded, Geographic Patterns of Air Passenger Transport in China 1980–1998 485

Figure 8 Dominant air passenger flows in China 1998.

the average distance between county units ket economy worked its way into China’s air and the nearest airports dropped from transport market and the air transport system 140.14 km in 1980 to 101.59 km in 1998, expanded with more airports in service. indicating significant improvement in acces- 4. Because of geographic locations, govern- sibility to airports in China. mental policies, and various other reasons, 2. Major airports in large cities dominated Chi- the East Region dominated air transport in na’s air transport in terms of air passenger China with a much higher share in passenger volume throughout 1980–1998, but such volume than its shares in population and dominance declined as more airports in me- GDP would suggest. Even the West Region dium and small cities were opened for service. enjoyed faster development in air transport Similarly, the expanded air transport system than the Middle Region. This ‘‘flyover ef- also enabled cities other than provincial cap- fect’’ has important implications for China’s itals to gain higher shares. The air transport regional development. centroid in terms of passenger volume was 5. A hub-and-spoke air transport system was located in Hubei and migrated southeast, clearly in place in China by 1998. Beijing and consistent with the general trend of economic Guangzhou were national hubs, along with centroid migration as coastal and south re- Shanghai as an important hub for its sur- gions developed faster than other areas. rounding coastal regions. Urumuqi, Xi’an, 3. Most air passengers in China traveled 500– Chengdu, and Kunming were regional hubs 2,000 km, with an average distance of 1,190 in the West Region. km (740 mi), similar to the U.S. The rule of distance decay in air traffic was more applica- When data of individual airlines and air ticket ble to China in 1998 than in 1985 as the mar- prices become available, we will examine the 486 Volume 56, Number 4, November 2004 impacts of deregulation and privatization in 9 Based on a survey by the Xinjiang Airlines in 1995 China’s airlines. Our plans also include studies (Dali Li 1998, 54), 44.35 percent of passengers of the hub-and-spoke systems in China, partic- within Xinjiang were ‘‘civil employees’’ on business ularly air package delivery services and other air (gong-wu) trips, whereas the same group accounted freight transports. We hope to report the results for only 32.5 percent among passengers outside Xinjiang. in the near future. ’ 10 Research also reveals that average urban wage in the West Region was also higher than in the Middle (Wang 2002, 241). Workers in state-owned enter- Notes prises and governmental employees were paid high- er wages as an important recruiting and retention 1 There is also close correspondence between GDP strategy in the West. Most fiscal transfers (subsidies) and revenue passenger-kilometer (RPK) flown. The tended to flow toward the West. Some interpreted ratio of their growth rates (RPK/GDP) once stood this as the Chinese version of ‘‘affirmative action’’ at 2:1, and recently declined to about 4:3 in the since the West has higher percentages of non-Han world (Graham 2000, 311). During the study pe- minorities (Raiser 1998, 18). riod, the average RPK/GDP ratio in China was 1.68. 2 Seven cities (Beijing, , Wuhan, Xi’an, Yinch- Literature Cited uan, , and Guilin) had two airports. Their records were merged for analysis. Akpoghomeh, Osi S. 1999. The development of air 3 The four Special Economic Zone Cities were Shenz- transportation in Nigeria. Journal of Transport Ge- hen, Zhuhai, and Shantou in and Xi- ography 7:135–46. amen in Fujian. The sixteen Designated Coastal Bowen, John. 2000. Airline hubs in Southeast Asia: Open Cities were Dalian, , Tianjin, National economic development and nodal acces- , , , , Nantong, sibility. Journal of Transport Geography 8:25–41. Shanghai, Ningbo, Wenzhou, Fuzhou, Guangz- Bowen, John T., and Thomas R. Leinbach. 1995. The hou, , , and Fangchenggang. state and liberalization: The airline industry in the 4 A county unit includes: a county or autonomous East Asian NICs. Annals of the Association of Amer- county (Xian) or banner or autonomous banner ican Geographers 85:468–93. (Qi), a county-level city (Xian-ji-shi), the only dis- Bureau of Transportation Statistics (BTS), U.S. trict or merged district (Shi-xia-qu) of a stand-alone Department of Transportation. 1997. National Trans- higher-order city (Di-ji-shi), multiple districts of a portation Statistics. Washington, DC: U.S. Govern- large city, and others (e.g., subdivision of county- ment Printing Office. level unit needed for regional analysis). China State Statistics Bureau. 1981–1999. China Sta- 5 More accurate computations of population and tistical Yearbook 1981, 1986, 1991, 1996, and 1999. economic centroids require data at a better resolu- Beijing: China Statistical Press. tion, for example, the county-level data. It is rea- ———. 1986, 1999. Urban Statistical Yearbook of China sonable to speculate that the economic centroid 1986 & 1999. Beijing: China Statistical Press. could have moved further east than shown in Figure Curry, L. 1972. A spatial analysis of gravity flows. Re- 4, because coastal areas within each coastal province gional Studies 6:131–47. also tended to develop faster than their inland Dempsey, P. S., and A. R. Goetz. 1992. Airline dereg- counterparts (Wang 2002, 243). ulation and laissez-faire mythology. Westport, CT: 6 The increase of b (in absolute value) from 1985 to Quorum. 1998 is contradictory to findings in the literature. Fotheringham, A. Stewart, and Morton E. O’Kelly. Given the low R2, the gravity model cannot be con- 1989. Spatial interaction models: Formulations and ap- sidered to fit China in 1985, and thus we should not plications. Dordrecht: Kluwer Academic. read much from the change of b value over time. Frankena, Mark W. 1978. A bias in estimating urban 7 One may also note that in Table 4 only one city, population density functions. Journal of Urban Eco- Wuhan, from the Middle Region, was ranked nomics 5:35–45. among the top fifteen cities in air passengers in Goetz, Andrew R. 2002. Deregulation, competition, both 1980 and 1998. The West Region, with less and antitrust implications in the U.S. airline indus- total population and GDP than the Middle, placed try. Journal of Transport Geography 10:1–19. six and four cities among the top fifteen cities in Goetz, Andrew R., and Christopher J. Sutton. 1997. 1980 and 1998, respectively. The geography of deregulation in the U.S. airline 8 In a Chicago stage play ‘‘Flyover,’’ people in the industry. Annals of the Association of American Geog- U.S. entertainment industry traveled from coast to raphers 87:238–63. coast and referred to anywhere in between as ‘‘fly- Graham, Brian. 1995. Geography and air transport. over,’’ in which they had little interest. Chichester: John Wiley and Sons. Geographic Patterns of Air Passenger Transport in China 1980–1998 487

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