Unformatted text preview: r, the trips through airport H and airport K are viewed by travellers as substitute trips. There is no direct flight connecting cities A and B so that passengers have to interline at the hubs H and K. The proposed network structure is meant as a first approximation to the above example and aims at capturing the particular aspect of alliances where carriers cooperate to offer trips in which passengers need to travel with two different airlines. Thus, city A would be Madrid and city B Washington and the hubs H and K would be Chicago and London, respectively; airlines 1 through 4 5 are Iberia, American Airlines, British Midland and United Airlines.5 We will assume that demand functions for air travel between cities A and B are linear as follows, Q12 = - b(p1 + p2 ) + d(p3 + p4 ) Q34 = - b(p3 + p4 ) + d(p1 + p2 ) where Q12 and Q34 represent the travel volumes on the two interline flights in the market; pi denotes the fare charged by airline i, for i = 1, 2, 3, 4; , are positive parameters that measure market size and the quality of the services provided; b, d are positive and b > d. This dem...
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This note was uploaded on 05/12/2010 for the course MAN 6721 taught by Professor Kraft during the Spring '10 term at University of Florida.
- Spring '10