Abstract: A decision-making model in the airline alliance network made up of two airlines is proposed and the effect of revenue sharing mechanism on performance in airline alliance networks investigated. Firstly, an equilibrium model in the airline alliance network is analyzed under the centralized decision-making. It is found that lower transportation costs not only reduce ticket prices of airlines, increasing passenger traffic, but also enhance the overall effectiveness of airline alliances. Secondly, under the revenue sharing mechanism, the decentralized decisionmaking model in the airline alliance network is investigated. The results show that revenue sharing mechanism can not only maximize the effectiveness of the individual alliance members, but also maximize the overall effectiveness of airline alliances. The implementation of the revenue sharing mechanism can improve the performance of airline alliance members. The level of performance is closely related to the revenue sharing coefficient, the substitution relationship between airlines and the ratio of operating costs in the domestic and international routes. In addition, the numerical results determine that the effects of different parameters on the performances of the airline alliance members are different under the revenue sharing mechanism.

Key words: airline alliance, revenue sharing, coordination, performance