CCI penalises Jet Airways, InterGlobe Aviation, SpiceJet for unfair biz ways

The Competition Commission today slapped a total penalty of more than Rs 54 crore on three airlines -- Jet Airways, InterGlobe Aviation and SpiceJet -- for unfair business practices with respect to fixing fuel surcharge on cargo transport.
Passing an order on the same complaint for the second time in nearly three years, the watchdog has directed the airlines to "cease and desist" from anti-competitive practices.
A fine of Rs 39.81 crore has been imposed on Jet Airways while the penalties on InterGlobe Aviation and SpiceJet are Rs 9.45 crore and Rs 5.10 crore, respectively, according to the CCI.
InterGlobe Aviation is the parent of no-frills carrier IndiGo.

There were no immediate comments from the three airlines.
The penalties translate to three per cent of the respective airlines' average turnover earned from levy of FSC (Fuel Surcharge) on the volume of cargo handled for the three-year period -- 2010-11, 2011-12 and 2012-13.

The Competition Commission of India (CCI) said penalties have been imposed on the airlines for "concerted action in fixing and revising FSC - a component of freight charges".
However, the latest quantum of penalties is much lower than what was imposed in 2015 by the regulator on these carriers.
At that time, the total fine was over Rs 257 crore.

Then, the fine was higher at Rs 151.69 crore on Jet Airways, Rs 63.74 crore on InterGlobe Aviation and Rs 42.48 crore on SpiceJet.
Following appeals, the November 2015 order was set aside by the erstwhile Competition Appellate Tribunal in April 2016 and the matter was remanded back to the CCI.
In its 42-page order today, the regulator noted the basic concern is the overcharging of cargo freight in the garb of fuel surcharge by the air cargo transport operators which adversely affect consumers beside stifling economic development of the country.
"It is important for the growth of the market that these cartels be broken and more transparency be brought in price fixing by the airlines by taking firm steps in this direction.

"Else, the fuel surcharge, which was essentially introduced to mitigate the fuel price volatility, will continue to be used as a pricing tool to the detriment of the users...," it said.
The order has been passed on a complaint by Express Industry Council of India against the airlines alleging cartelisation. It was filed against
five airlines -- Jet Airways, InterGlobe Aviation, SpiceJet, Air India and GoAir.
However, the CCI did not find violation of competition norms by Air India and GoAir in this matter.
Citing its investigation arm DG, the Commission said GoAir gave its cargo belly space to third party vendors.

The airline was never part of any commercial/ economic aspects of cargo operations done by its vendors including imposition of FSC, it added.
"So far as OP-4 (Air India) is concerned, the Commission notes that when there was a substantial decline in the fuel costs, the fuel surcharge was withdrawn. In these circumstances, it is difficult to record any definite finding of contraventions against OP-4 as well," the order said.