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This is a Simplified Chinese version. On 27 April, 2001, the Civil Aviation Administration of China (CAAC) announced the merger of nine airlines under its direct administration into three giants known as China Southern Airlines Group, China Eastern Airlines Group and Air China Group. By consolidating the airline industry in China, the CAAC intends to help the domestic airlines to gain competitiveness towards an open market in preparation for China's imminent entry to the WTO. The case examines the WTO impact on China's airline industry and the appropriateness of the CAAC's decision to reform China's airline industry through consolidation. The students are encouraged to recommend alternative strategies to reform China's airline industry.