Fair Revenue Sharing Mechanisms for Strategic Passenger Airline Alliances

ebook Lecture Notes in Economics and Mathematical Systems

By Demet Çetiner

cover image of Fair Revenue Sharing Mechanisms for Strategic Passenger Airline Alliances

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​A major problem arising in airline alliances is to design allocation mechanisms determining how the revenue of a product should be shared among the airlines. The nucleolus is a concept of cooperative game theory that provides solutions for allocating the cost or benefit of a cooperation. This work provides fair revenue proportions for the airline alliances based on the nucleolus, which assumes a centralized decision making system. The proposed mechanism is used as a benchmark to evaluate the fairness of the revenue sharing mechanisms, where the alliance partners behave selfishly. Additionally, a new selfish revenue allocation rule is developed that improves the performance of the existing methods.
Fair Revenue Sharing Mechanisms for Strategic Passenger Airline Alliances