"IT" is a tricky issue in SC!
Generally, we're told that every pronoun must have a clear and present antecedent. However, in English, "it" is also used in
set expressions, or to describe
general states of being. We can think of it as a placeholder for "the situation" or "things":
It is raining
It seems like you're unhappy.
It's a shame that you couldn't come
It pays to learn grammar
It doesn't matter
Forget about it!
It isn't as bad as you think
All of these usages are perfectly correct.
It's rare (<-- see what I did there?) to see this vague, general "it" tested in GMAT SC, though, because it doesn't always conform to (easily expressed) rules. In the few examples of SC sentences that have this usage of "it" in the underlined portion, most of the time the right answer switches the structure to get rid of "it." There are a few examples that have this usage in correct answers, though (I'll link to those later).
Much of the time, a set expression with "it" will create a PASSIVE structure that might otherwise be ACTIVE.
It is expected that the test will be hard --> The test will likely be hard. or
Students expect the test to be hard.
It seems like you're angry with me. -->
You seem angry with me. or
I perceive that you're angry with me.
Remember, though, that PASSIVE IS NOT WRONG! Active is simply preferred when the meaning is otherwise equal.
Now to your example sentence...
The airline's proposed purchases of as many as 250 medium-range planes will probably be the basis of an overhaul of its routes; it is expected that they will increase the number of direct point-to-point flights, instead of continue to use feeder aircraft to bring passengers to major hubs.
(A) it is expected that they will increase the number of direct point-to-point flights, instead of continue
(B) it is expected that it will increase the number of direct point-to-point flights, rather than to continue
(C) it is expected that the number of direct point-to-point flights will increase, instead of their continuing
(D) the airline is expected to increase the number of direct point-to-point flights, rather than continue
(E) the airline is expected to increase the number of direct point-to-point flights, instead of its continuing
There is no issue with using "it is expected..." to complete that sentence. A, B, and C each had other issues:
(A) it is expected that they will increase the number of direct point-to-point flights, instead of continue
- We cannot use "they" to refer to "the airline."
- the idiomatic construction "instead of" should only take a NOUN as its object, not a verb.
(B) it is expected that it will increase the number of direct point-to-point flights, rather than to continue
- violation of parallelism. "... that it will increase... rather than to continue..." is not parallel.
- the "it" in "it is expected" is fine. The "it" in "it will increase" refers back to "airline." But... when the word "it" appears twice in one sentence, they
should both refer to the same antecedent. The grammatical jury is out on whether the generic "it" counts toward this rule... but whenever the jury is out on a particular rule, the GMAT is highly unlikely to test it.
(C) it is expected that the number of direct point-to-point flights will increase, instead of their continuing
- "their" is incorrectly trying to refer to "airline"
- the parallelism is both illogical and grammatically incorrect: "flights will increase... instead of their continuing..."
(D) the airline is expected to increase the number of direct point-to-point flights, rather than continue
Correct!
(E) the airline is expected to increase the number of direct point-to-point flights, instead of its continuing
- not parallel: "to increase... instead of its continuing..."
