An Assessment of Factors Affecting Airline Coalitions Using Decision and Cooperative Game Theory

Because of the rigorous competition in the air travel market, more airlines tend to form alliances to extend market shares and to enhance their competitiveness. Cooperation among airlines includes code sharing, equity sharing, merging and acquisition, but this paper only focus on code sharing and merging in this study. The paper first formulate payoff functions under various airline coalition scenarios. Then, the paper assesses the effectiveness of code sharing and merging by the estimation of Shapley values. By applying TOPSIS, the paper creates several priority rankings of target airlines in the games of code sharing and merging. A case study based on Taiwan’s domestic airlines was used for demonstration.