Research On The Collaborative Cooperation Of Trunk And Feed Airlines Based On Game Theory

With the rapid development of civil aviation during the past few years, the domestic trunk airline transport seems to reach its ceiling while the regional feed airline transport barely has the chance to make any progress for the restrictions of geography, economy and policy. The collaborative trunk-feed cooperation has better network efficiency and flexibility compared to the traditional singular operation mode. However, there is no such effective cooperation in the market for the time being but only endless competition on price and discount. Therefore, this paper, based on game theory, studies the collaborative cooperation of trunk and feed airlines in order to give suggestions for the development of civil aviation.This paper proposes six game models for four airlines in one market and analyzes the airlines' benefits and social welfare of each model. The analysis concentrates on both simultaneous and sequential games. In addition, this paper introduces actual airlines' data to verify the reliability of the model, making a further step for researches in this field.In the simultaneous game model, it uses Shapley Value method to figure out the distribution of alliance benefits and works out the optimized model, which is feed-trunk-feed alliance, via the analysis on the airlines' benefits and social welfare under different product substitutability. Then, the paper holds that for the sequential game between allies and non-alliance member, the best strategy is that the former should be follower while the latter leader in terms of the auto-choice of the market. In contrast, the result is just the opposite when it comes to social welfare, indicating that to gain the largest social welfare in the industry, adjustment from a third participant, like government, is necessary.