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An airline revenue management pricing game with seat allocation

Author

Listed:
  • Asif Syed Raza
  • Ali Akgunduz

Abstract

This paper studies a horizontal fare-pricing competition between two airlines having a single flight leg. Two distinct scenarios are considered. First, the two airlines price competition for the pre-committed booking limits is analysed. The problem is studied under deterministic price sensitive demands. The existence of unique pricing strategies at Nash equilibrium is shown. In the second scenario, a joint seat allocation and fare-pricing competition model for stochastic demand is proposed. A numerical analysis is presented to demonstrate the impacts of various market conditions on the payoffs, booking limits and pricing strategies of the competing airlines.

Suggested Citation

  • Asif Syed Raza & Ali Akgunduz, 2008. "An airline revenue management pricing game with seat allocation," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 2(1), pages 42-62.
    • Handle: RePEc:ids:ijrevm:v:2:y:2008:i:1:p:42-62
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    Cited by:

    1. Brian So, 2017. "An implementable optimization of airfare structure," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(5), pages 441-465, October.
    2. Yu, Shunan & Yang, Zhongzhen & Zhang, Wei, 2019. "Differential pricing strategies of air freight transport carriers in the spot market," Journal of Air Transport Management, Elsevier, vol. 75(C), pages 9-15.

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