China’s aviation industry is experiencing high levels of growth, at rates higher than GDP growth. This is a relatively young industry in the country compared to more developed nations. With the removal of regulations in 1997, airlines have become more competitive, servicing more airports and routes than before. There are four major state run airlines: Air China, China Eastern Airlines, China Southern Airlines, and Hainan Airlines. These carriers maintain a fleet of 2500 aircraft, which is speculated to grow to about 4500 by 2016. While the majority of aircraft operated are Boeing 737 and Airbus A320, China is developing a rival, the C919 to compete as domestic airlines grow. This, in addition to the dramatic expansion in the airport network that has started positions the industry for a significant amount of growth. Currently, the International Air Transport Association (IATA) has cited growth of 10.8% per annum of air passengers until 2014, and 12.2% growth per annum of cargo volume until. An estimated 800 million passengers are expected to fly globally by 2014, more than a quarter would be Chinese. This growth is driven by large economic growth in the Asia-Pacific region as business grows, and the already booming import/export sector of the economy scales up. However, cargo is not the only driver of growth. The market for low-cost carriers, already booming in the US, is growing extremely fast in China. Airlines have lobbied to legalize “standing room seats” in an effort to drive down currently high relative ticket prices. Regulatory approval remains the key constraint however in the growth of low cost carriers, and any substantial growth would require liberalization of the market. With competition high between air carriers and high-speed train networks, Airlines are competing to differentiate and maintain their high level of growth domestically.