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This structured assignment is to accompany the case ''306-422-1''. The abstract of the case is as follows: By 2005, Air China was the only profitable carrier among the three major airlines in China. The other two, China Southern and China Eastern, were making losses. The low cost carriers also were struggling. In contrast, the Chinese aviation market had become the second largest in the world after the US, carrying 138 million passengers in 2005. Apart from that, Chinese airlines ordered a large number of new aircrafts in 2005. Analysts felt that government interference in matters related to operations was the main reason behind the airlines'' poor performance. Though the government was reforming the airline industry to make the Chinese airlines more competitive, experts doubted Air China''s ability to remain profitable in the long run. The case discusses, in detail, the evolution of China''s aviation industry to its present form as well as government reforms. It also discusses Air China and its operations. The concluding section attempts to highlight the challenges that the Chinese aviation industry (particularly Air China) faces. It also tries to raise a question regarding the structure of the industry in the future.