U.S. and foreign airlines will be allowed to provide free or reduced-rate transportation to athletes and coaches participating in sporting events designed as substitutes for those not attending the Olympic Games in Moscow, the Civil Aeronautics Board said yesterday.

The CAB action -- taken by the staff under authority delegated by the board -- came in response to an application filed by Pan American World Airways, but it will apply to all airlines wishing to carry athletes for free or at fares lower than those offered the general public.

Between now and the end of the year, numerous sporting events are being held at various cities throughout the world for those who are unable to attend the 1980 Summer Olympics in Moscow because of the boycott by the United States and others of the Soviet-hosted event. Because of the number of events being scheduled, available United States Olympic Committee development funds will be insufficient to cover the costs of air travel. Pan Am told the CAB.

Under the board's decision, airlines can provide the free or reduced-rate transportation to athletes, trainers, coaches and others designated by the U.S. Olympic Committee or its member organizations who are traveling to or from sporting events conducted for those nations not participating in the 1980 Summer Olympic Games in Moscow.

Pan Am had proposed to offer the athletes reduced-rate transportation at 90 percent of the lowest available fare, without regard to advance purchase, minimum or maximum stay or any other restrictions. But the CAB noted that it was possible that some airlines may wish to provide air service at lower rates than Pan Am had proposed.

Midway Airlines, for instance, has offered to provide free transportation to Washington from anywhere on its system (five Midwestern cities) for athletes and coaches attending National Honors Day events.