Monopoly watchdog the Competition Commission of India (CCI) has found no competition issue in the 2008 strategic alliance between private carriers Jet Airways and Kingfisher Airlines.
The CCI, which had ordered a probe into the alliance in 2009, has said that "no violation of either Section 3 or Section 4 is found to have been established against Jet Airways and Kingfisher Airlines and matter deserves to be closed".
The Section 3 and the Section 4 of the Competition Act 2002 pertain to anti-competitive agreements and abuse of dominant position, respectively.
The CCI had ordered the probe on the basis of a complaint from a frequent flier that if such an agreement was inked then the two airlines would dominate the market leading to cartel formation.
The then proposed alliance could result in an abuse of dominance as the two would control market share of close to 60%.
However, CCI's final order said, "On examining the agreements/arrangements entered into between Jet Airways and Kingfisher Airlines it is noted that none of these agreements can be said to have either determining the airfares or limiting the supply or allocating the market."
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The watchdog also noted that such kind of agreements have not only been entered between Jet and Kingfisher but they also have similar separate arrangements with a large number of other domestic as well as international airlines and most of them have been entered with NACIL (Air India).
"It is also noted that the market share of both the parties has remained constant even after passing of almost two years of the public announcement [on October 13, 2008]," it said.
Soon after the Director General (Investigations) of CCI began the probe, Kingfisher had challenged the jurisdiction of CCI to enquire into the strategic agreement with Jet in the Bombay High Court and in the Supreme Court.
However, both the courts passed judgement in favour of CCI after which the probe resumed.
The scope of the strategic alliance between Jet and Kingfisher, announced in October 2008, includes code-sharing on both domestic and international flights and joint fuel management with a view to reducing expenses.
Besides common ground-handling, cross-selling of flight inventories using a common global distribution system platform and cross-utilisation of crew on similar aircraft types are the other key areas of the proposed agreement.
According to industry sources, although the alliance was announced in 2008, it was functional for two-three months only.