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Game Theory: The Modern-Day Airline Dogfight, Nathaniel Schattner

Honors Theses

This study examines the narrowing differentiation between legacy airlines and low-cost carriers in the United States by exploring the competitive strategies each group borrows from one another. Specifically, this work examines the implementation of a new type of economy fare by Delta Air Lines, called basic economy, and evaluates how the fare has impacted a key metric of airline performance: domestic operating revenues.

In the first part of this thesis, an explanation of the history behind airline marketing efforts as well as what constitutes a low-cost carrier and a legacy carrier is provided. A brief description of game theory is …