Gateway diversity and competition in international air transportation

Abstract

Because of the existence of “limited designation” gateways, i.e., gateways for international air travel where entry by U.S. flag carriers is limited (in many cases to only one carrier), the U.S. Civil Aeronautics Board (CAB) has announced a policy of “gateway competition.” This policy seeks to maximize inter-gateway competition as a goal of the carrier selection process. The paper reviews the rationale and history of this policy and the economic principles of gateway competition. After addressing exceptions where gateway competition does not enhance competitive goals, the issue of how to enforce the credibility of the bidding process in route awards is addressed. The paper concludes by identifying circumstances where competitive objectives are not advanced through application of the principle gateway competition.