University of California Transportation Center

This research, sponsored by the Port Authority of New York and New Jersey, involved the development and application of a model of International Gateway Competition, to be used for purposes of airport demand forecasting and airline strategy assessment. The model, named ALIGATER (AirLine International Gateway Traffic Estimator) simulates and finds Nash equilibrium states for competition between a set profit maximizing airlines. Inputs to the model include airline characteristics, including network type, gateway location, strength of feed to gateways, and aircraft characteristics; passenger demand and fare levels between international origins and destinations; and the specification for a logit model of airline market share. These inputs define the profit functions of the individual airlines. In the simulation, the profit maximizing set of transcontinental service frequencies are found for each airline in succession, until the system converges to an approximate equilibrium state.