Optimum channel strategy for air ticketing

This paper focuses on air ticketing in a duopoly market. The games with three different channel structures, including the integrated structure (selling tickets through company channels), common franchisee structure (selling tickets through a common franchisee), and decentralized franchisee structure (selling tickets through different franchisees), are modeled to explore the optimum channel strategy for airline companies in various competition situations and high/low seasons. These game models are built based on Trivediʹs linear demand function including air ticket and franchisees competitions. Findings suggest that the integrated structure is the optimum channel choice for airline companies in most situations. However, if there is intense competition between franchisees and between tickets, and the season is favorable to the aviation industry, the decentralized franchisee structure is the optimum channel choice for airline companies.