Article ID: | iaor20128273 |
Volume: | 41 |
Issue: | 4 |
Start Page Number: | 641 |
End Page Number: | 652 |
Publication Date: | Aug 2013 |
Journal: | Omega |
Authors: | Kimms A, etiner D |
Keywords: | business process modelling, revenue sharing |
Airline alliances offer flights including flight legs operated by different airlines. A major problem is how to share the revenue obtained through selling a flight ticket among the airlines in a fair way. Recently, Kimms and Çetiner [1] have proposed fair revenue allocations based on the solution concept nucleolus, which assumes that the decisions of the alliance are given centrally. However, in an alliance, each airline has a selfish behavior and tries to maximize its own revenue. The contribution of this paper is twofold. First, we provide a method to evaluate the fairness of revenue sharing mechanisms applied in a selfish setting. The method includes a simulation model for the booking process of the alliance and uses the nucleolus‐based allocations as benchmark. Second, we develop a revenue sharing mechanism based on the transfer of dual prices. The fairness of the new mechanism and several other existing approaches is assessed through a numerical study.