Following WW2 air traffic within China was in chaos, with no scheduled operations and the majority of aircraft and facilities destroyed. The creation of a Civil Aviation Bureau in 1950 and its replacement by the Civil Aviation Administration of China (CAAC) four years later only slowly changed this situation, whilst at the same time consolidating all aspects of air traffic under a single body. It wasn't until the mid-60s that traffic returned to even its pre-war levels, not helped by effects of the Great Leap Forward, but then again air travel in Communist China was not for the general public but only for government and communist party officials.
A major feature of the Great Leap Forward's second Five Year Plan was decentralisation and this saw CAAC split into six regional bureaus (Beijing, Shenyang, Shanghai, Guangzhou, Chengdu, and Lanzhou) with 22 provincial and municipal authorities beneath them. The Great Leap Forward was not a success and the following Cultural Revolution a disaster. In parallel, relations with the Soviet Union were worsening and Soviet support dried up. Unsurprisingly this combination of factors saw a major retrenchment of the small gains aviation had made since 1945.
Following Mao's 'victory' in the Cultural Revolution more moderate policies saw the country return to a semi-normal state and the end of the enforced isolation pursued up till then. This was partly to counter the Soviet threat and led to a rapprochement with the USA and an expansion of international air service with Boeing 707s. Following Mao's death in 1976 attempts to centralise the CAAC were not a success and with continuing economic strife caused by the policies of centralised planning a reformist view became acceptable whereby elements of a market economy would be introduced. The reforms were gradually rolled out across the economy and by 1985 it was aviation's turn.
1985-1994: Marketisation and Growth
CAAC was to be split so that it would continue to exist as an administrative body, but no longer have control over direct airline operations. Its airline component was split into multiple separate carriers based upon the existing administrative regions. Additionally other government departments, local authorities and businesses were able to start their own airlines and airports were gradually transferred to local authorities.
In 1984 prior to CAAC's breakup trials with the Xiamen special economic zone had already created Xiamen Airlines and in 1985 China Xinjiang was created as a 50:50 joint venture with the regional government in the remote region. Also in 1985 the Shanghai city government and local businesses created its own airline, Shanghai Airlines.
The initial children of CAAC created between 1987 and 1991 where:
The first three were much larger than the rest and accounted for half of China's air travel with the remaining three accounting for a further 26%. China Southern was the largest domestic airline but Air China and China Eastern had substantially larger international operations. By 1994 there were over 40 air carriers but the strains on infrastructure and safety saw the CAAC stop issuing new licenses from July 1994.
Growth of the fleet has been impressive. Between 1990 and 1994 it grew from only 123 aircraft to 309 with their market value tripling. A slowdown followed as infrastructure caught up and balance of payments issues resolved but generally the trend has been ever upwards. The majority of aircraft for Chinese airlines are centrally purchased by the China Aviation Supply Corporation with only the big three able to sign their own deals, and even they have to get approval. This lends itself to economies of scale but does mean that fleet rationalisation is often irrelevant. It also has meant that only new aircraft have been purchased which has significantly increased the safety and improved the image of Chinese airlines (compared to the days of 'Chinese Airlines Always Crash') as well as mitigate maintenance and pilot shortage issues.
1994-2014: Consolidation & Huge Growth
A period of consolidation followed the 1994 CAAC action allowing airlines to expand their influence by taking over others in fast growing regions. In 2002 this resulted in the formation of three major airline groups with the merger of the three original smaller state owned airlines (plus several others) with the big three. This was followed by the big three also taking over several of the larger independents like Shanghai Airlines - though generally they have remained as separate operations. The Hainan Airlines group has also grown progressively to form a significant private airline bloc operating under many aligned brands. By October 2013 89% of the domestic Chinese market was operated by the four main groupings. Of the remaining 11% half is owned by Sichuan Airlines. Despite the consolidation of ownership the number of airlines continues to increase as existing airlines partner with local governments to form new carriers. In late 2013 there were about 25 scheduled airlines left but there are at least 15 more preparing to join the marketplace by 2015.
In recent years there has been much interest in true low cost carriers however aside from Spring Airlines there has been limited penetration by LCCs partly because of bureaucracies and partly because the major groupings have looked largely at changing full service airlines to LCCs, which is typically a fraught process. It remains to be seen how low-cost carriers alter the predominantly full service landscape.
Growth has by any measure been staggering and the Chinese market has expanded to become the 2nd largest in the world. In 1990 less than 25 million people were handled per year, a figure which had grown to 192.5 million people by 2008. Aircraft movements have increased in the same period from 500,000 per year to 4.2 million. Still, the Chinese market in 2008 was not even twice the size of the UK market so there is plenty of room for further growth. The airline fleet has grown from 1994's 309 aircraft to April 2014's 2,216. By mid 2014 six Chinese airlines operated over 100 aircraft each whilst Air China and China Eastern had over 300 and China Southern over 400.