Title: A bargaining framework for the airline alliance revenue sharing problem

Authors: Sri Vanamalla Venkataraman; Parthasarathy Ramachandran

Addresses: Department of Industrial and Management Engineering, Indian Institute of Technology Kanpur, Kanpur 208 016, India ' Department of Management Studies, Indian Institute of Science, Bangalore 560 012, India

Abstract: The main objective of complementary code share flights is to increase scope of the partner's network. When complementary codeshared flights aim at maximising their combined revenue, it might lead to inequitable distribution of revenue. Through this work, we address this issue of achieving a fair division of the combined revenue generated by the alliance network. Information of an airline's valuation of their product is typically private and could be overstated to increase their share of revenue generated through codeshare agreements. We therefore develop a bargaining framework and derive the conditions under which a specific point in Core of the cooperative game can be achieved.

Keywords: revenue management; airline alliances; revenue sharing; game theory; bargaining mechanisms; Shapley value; Core; complementary codeshare flights; alliance networks; codeshare agreements; cooperative games; airlines.

DOI: 10.1504/IJRM.2016.079817

International Journal of Revenue Management, 2016 Vol.9 No.4, pp.201 - 220

Received: 25 Aug 2015
Accepted: 04 Mar 2016
Published online: 16 Oct 2016 *

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