An airline revenue management pricing game with seat allocation

Asif Syed Raza, Ali Akgunduz*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)


This paper studies a horizontal fare-pricing competition between two airlines having a single flight leg. Two distinct scenarios are considered. First, the two airlines price competition for the pre-committed booking limits is analysed. The problem is studied under deterministic price sensitive demands. The existence of unique pricing strategies at Nash equilibrium is shown. In the second scenario, a joint seat allocation and fare-pricing competition model for stochastic demand is proposed. A numerical analysis is presented to demonstrate the impacts of various market conditions on the payoffs, booking limits and pricing strategies of the competing airlines.

Original languageEnglish
Pages (from-to)42-62
Number of pages21
JournalInternational Journal of Revenue Management
Issue number1
Publication statusPublished - 2008
Externally publishedYes


  • Nash equilibrium
  • airline revenue management
  • game theory
  • pricing
  • seat inventory control

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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