Modelling Airlines Competition on Fares and Frequencies of Service by Bi-level Optimization

Abstract

The research aims to understand how airlines make operative decisions on fares and frequencies of service in a competitive envi-ronment. A game approach has been developed to model the airlines’ choices in a duopolistic market. In particular, the short haul market for intercity linkages has been investigated. In this segment the air mode is in competition with other ground modes (i.e. road and high speed rail). A bi-level optimization program has been realized. The variables of model are: fares and frequencies of airlines.

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