May 01, 2012
12:30 PM - 2:00 PM
12:30 PM - 2:00 PM
IEOR-DRO Seminar: Prof. René Caldentey (New York University). Revenue Sharing in Airline Alliances.
Speaker: René Caldentey, New York University
Title: Revenue Sharing in Airline Alliances
Abstract: Airline alliances are a growing trend in the airline industry. From a revenue management perspective, one of the most significant features of these alliances are codeshare itineraries by which independent airlines can collaboratively market and operate flights. Different from traditional, monopolistic airline revenue management, alliance members control a decentralized network of resources through independent reservation and information systems. In this research, we investigate contractual agreements between multiple airlines operating within a network alliance. We study contracts that specify how revenue should be split among the carriers. We propose a two-step hierarchical approach. First, we formulate a static problem in which airlines select partitioned allocations and show that a simple transfer price mechanism achieves first best. Then, we study the dynamic problem and prove that the static transfer prices are asymptotically optimal.
(Joint work with Xing Hu and Gustavo Vulcano, NYU)
Title: Revenue Sharing in Airline Alliances
Abstract: Airline alliances are a growing trend in the airline industry. From a revenue management perspective, one of the most significant features of these alliances are codeshare itineraries by which independent airlines can collaboratively market and operate flights. Different from traditional, monopolistic airline revenue management, alliance members control a decentralized network of resources through independent reservation and information systems. In this research, we investigate contractual agreements between multiple airlines operating within a network alliance. We study contracts that specify how revenue should be split among the carriers. We propose a two-step hierarchical approach. First, we formulate a static problem in which airlines select partitioned allocations and show that a simple transfer price mechanism achieves first best. Then, we study the dynamic problem and prove that the static transfer prices are asymptotically optimal.
(Joint work with Xing Hu and Gustavo Vulcano, NYU)