A bargaining framework for the airline alliance revenue sharing problem. (2016)

• Record Type: Journal Article
• Authors: Venkataraman, Sri Vanamalla; Ramachandran, Parthasarathy
• Is Part Of: International journal of revenue management. Volume 9:Number 4(2016)
• Page Start: 201
• Page End: 220
• Publication Date: 2016
• Subjects: revenue management -- airline alliances -- revenue sharing -- game theory -- bargaining mechanisms -- Shapley value -- Core -- complementary codeshare flights -- alliance networks -- codeshare agreements -- cooperative games -- airlines; Revenue management -- Periodicals; Business enterprises -- Finance -- Periodicals; 658.1554
• Languages: English
• ISSNs: 1474-7332

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.