Abstract
This article addresses an airline revenue management strategy to jointly determine both the seat allocation and the fare price for a single leg flight in a duopoly market. Two game theoretic scenarios: non-cooperative and cooperative are considered. In non-cooperative game setting, existence of pure strategy Nash Equilibrium for the perfect competition between two airlines is shown. In cooperative scenario, two bargain games that differ in availability of side payment (SP) option while sharing of the gain of cooperation are studied. Numerical study based on a series of statistical comparisons shows that cooperation with the SP options results superior payoffs to both airlines compared to cooperation with no SP options. A regression analysis is used to analyse the impact of various market factors on payoffs.
Original language | English |
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Pages (from-to) | 277-296 |
Number of pages | 20 |
Journal | International Journal of Operational Research |
Volume | 7 |
Issue number | 3 |
DOIs | |
Publication status | Published - Mar 2010 |
Externally published | Yes |
Keywords
- Airline revenue management
- Bargain game
- Fare pricing
- NE
- Nash Equilibrium
- Seat inventory control
ASJC Scopus subject areas
- Management Science and Operations Research