In the past 14 years, deregulation has been a stable policy executed step by step in the air transportation industry of Taiwan. From entrance barriers to price control, Taiwan has almost lifted the major regulations in air transportation industry. However, in the process towards a free market, some of the business activities are found to be re-regulated by the authorities of economic affairs, rather than the aviation administration. The fair trade committee in Taiwan has found the structure change of air transportation industry after deregulation. Airline merging has reduced the total number of carriers, and made Cartel activities easier and popular. On some specific routes, the entire industry was even changing from oligopoly to monopoly, which is against the general business discipline and fair trade law in Taiwan. This paper reviews some major issues around the policy conflicts between aviation and business administration. These conflicts, including free endorsement, joint promotion, and the floating fare with service frequencies reduction, are discussed separately. Consumer surplus and related welfare theories are used as an analytical tool to examine the different point of views in some of the policy conflicts. Finally, more potential conflicts are introduced, and further studies of numerical analysis are also suggested.
Abstract