Competitive Strategy in the Airline Industry: A Game Theoretic Analysis of Marketing Tactics in Zero Sum Games

The airline industry is highly competitive, with a few major players controlling the majority of the market share. Marketing strategies such as pricing, promotions, and customer loyalty programs often play pivotal roles in determining a firm's success. This paper applies game theory, particularly zero-sum games, to analyze competitive dynamics in the airline industry. A zero-sum game, where one firm's gain is exactly another's loss, provides a useful framework to study the consequences of marketing decisions in oligopolistic markets. This paper explores the pros and cons of competing vs forming strategic alliances in the airlines industry using game-theoretic tools. It does also explore how airlines use marketing tactics to respond to competitors’ moves and how these strategies can lead to equilibrium outcomes. The paper also integrates real-world examples from the airline industry to illustrate how these theoretical concepts manifest in practice.