This preview shows page 1. Sign up to view the full content.
Unformatted text preview: he
generates important benefits for interline passengers. See also Lee (2003) for a criticism on some evaluations of the US airline industry. 4 paper is structured as follows. Section 2 introduces the model presenting the pre-alliance equilibrium and the equilibria arising from the situations with a single and a double alliance, respectively. A simultaneous game of airline alliances is then presented. Section 3 proposes a modification of the model where there is a new airline operating. A brief concluding section closes the paper. 2 The Model Basic assumptions.
The model's network structure is shown in Figure 1. Airline 1 operates route AH, airline 2 serves route HB, airline 3 provides the flight AK and airline 4 operates route KB. Travellers wish to fly from city A to city B through airport H or through airport K. Thus, travellers must fly by either combining airlines 1 and 2 or by combining airlines 3 and 4 so that routes AH and HB are regarded as complementary products (just as routes AK and KB together). Howeve...
View Full Document
- Spring '10