Tokyo: Eastern Asia Society for Transportation Studies (EASTS)
This paper analyzes the airline competition behavior with various types of alliances, such as code sharing and acquisition, by applying cooperative game theory. The study first reviews the definition and theorem of the core, the stable sets, and the bargaining sets, then formulates the airline's payoff as functions of air fares and service frequencies. The payoff function is composed of air travel demand model and cost model. Neit, mathematical programs are developed to solve for the core, the stable sets, and the bargaining sets. A solution approach is then presented to find the payoff configuration and the coalition structure under market equilibrium. Finally, a case study based on data of the domestic airline market in Taiwan is illustrated as a model application.
Journal of the Eastern Asia Society for Transportation Studies 3(2), pp.193-208