Abstract
By applying the game theory, the relationship between airline ticket price and optimal flight frequency is analyzed. The paper establishes the payoff matrix of the flight frequency in noncooperation scenario and flight frequency optimization model in cooperation scenario. The airline alliance profit distribution is converted into profit distribution game based on the cooperation game theory. The profit distribution game is proved to be convex, and there exists an optimal distribution strategy. The results show that joining the airline alliance can increase airline whole profit, the change of negotiated prices and cost is beneficial to profit distribution of large airlines, and the distribution result is in accordance with aviation development.
Highlights
With the increasing demand of air travel, not a single airline is able to achieve global seamless service
The airline alliance profit distribution is converted into profit distribution game based on the cooperation game theory
The results show that joining the airline alliance can increase airline whole profit, the change of negotiated prices and cost is beneficial to profit distribution of large airlines, and the distribution result is in accordance with aviation development
Summary
With the increasing demand of air travel, not a single airline is able to achieve global seamless service. In this paper we develop a methodology to analyze cooperative game among airline alliance market. Literature [2,3,4,5,6,7] analyzed the development and constraints of the airline alliance and the multilateral relationships in it. Its fundamental purpose is to obtain economic benefits for the airlines This is crucial for the stability and improvement of the alliance, and for the participating motivation of the members. Most of the above literatures studied the profit distribution in the alliance based on assumed flight frequency. We analyze the relationship between the ticket price and the flight frequency under competition and cooperation circumstances and develop a profit distribution model for the airline alliance
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