Imposes penalty of Rs 258 crore on the carriers for allegedly fixing and revising fuel surcharge through concerted action
The Competition Commission of India (CCI) on Tuesday imposed a penalty totalling Rs 258 crore on domestic carriers – Jet Airways (Rs 151.69 crore), IndiGo (Rs 63.74 crore) and SpiceJet (Rs 42.48 crore) – for fixing and revising fuel surcharge (FSC) for cargo transport through "concerted action".
The fair trade regulator's order comes after the apex industry body of express companies, Express Industry Council of India (EICI) filed a complaint against five airlines, including state-owned Air India (AI) and Go Airways, under Section 19(1)(a) of the Competition Act.
The penalty, which is 1% of the average turnover of each airline over the last three financial years, is more than the airlines' profit for a single quarter. For instance, Jet's net profit for the September quarter in the current fiscal stood at Rs 87.59 crore and that of SpiceJet, Rs 23.77 crore.
Ajay Jasra, spokesperson of SpiceJet, said his airline was reviewing the order and would "challenge it".
"We are examining the order and after that we will challenge it," he told dna.
In its complaint, the representative body of express industry alleged cartelisation by the airlines that was in contravention of the provisions of Section 3 of the Act that deals with anti-competitive agreements.
"The commission noted that the airlines acted in parallel in collusion in fixing FSC rates. Such conduct was found to have resulted in indirectly determining the rates of air cargo transport and thereby in contravention of the provisions of Section 3(1) read with Section 3(3)(a) of the Act," said a note issued by the CCI.
"No penalty, however, was imposed upon Air India Ltd as its conduct was not found to be parallel with other airlines. Similarly, no penalty was imposed upon Go Airlines (India) Ltd as it gave its cargo belly space to third party vendors with no control on any part of commercial/ economic aspects of cargo operations done by vendors including imposition of FSC," said the EICI release.
Along with penalty, the CCI reprimanded the carriers, noting, "Such conduct in the air cargo industry undermines economic development of the country and ultimately acts to the detriment of end consumers".
It said the penalty was leniently calculated considering the "precarious financial position of airlines". The commission has also issued a cease and desist order against the airlines.
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