Abstract
This paper studies a horizontal fare-pricing competition between two airlines having a single flight leg. Two distinct scenarios are considered. First, the two airlines price competition for the pre-committed booking limits is analysed. The problem is studied under deterministic price sensitive demands. The existence of unique pricing strategies at Nash equilibrium is shown. In the second scenario, a joint seat allocation and fare-pricing competition model for stochastic demand is proposed. A numerical analysis is presented to demonstrate the impacts of various market conditions on the payoffs, booking limits and pricing strategies of the competing airlines.
Original language | English |
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Pages (from-to) | 42-62 |
Number of pages | 21 |
Journal | International Journal of Revenue Management |
Volume | 2 |
Issue number | 1 |
DOIs | |
Publication status | Published - 2008 |
Externally published | Yes |
Keywords
- Nash equilibrium
- airline revenue management
- game theory
- pricing
- seat inventory control
ASJC Scopus subject areas
- Business and International Management
- Finance
- Economics and Econometrics
- Strategy and Management