Anti-trust regulatory body Competition Commission of India has given a clean chit to the country’s leading airline companies ? Kingfisher, Indigo, Spice Jet and Jet Airways ? in the case pertaining to higher fares charged at the backdrop of an Air India strike called on April 26 last year.
The case was referred to the commission by the ministry of corporate affairs in May last year asking CCI to probe whether these airline companies had exorbitantly hiked fares owing to a shortage in seats because of the Air India stir. The commission had also been asked to specifically probe whether the consumers were forced to purchase tickets online closer to the date of departure.
In an extensive probe conducted by the director-general office of the commission, the CCI had sent probe letters to Jet Airways and JetLite, Kingfisher, Spice Jet, Go Air and Indigo. Apart from that two leading travel agencies statements ? Balmer Lawrie and Ashoka Travellers and Tours ? were also recorded. The commission sent notices to makemytrip.com and yatra.com as well.
In the final investigation report the DG noted that no airline enjoys a market of 20% or more. It noted that airlines ?follow a dynamic pricing principle? and their fare slabs are designed from the lowest to the highest. The prices of tickets rise steadily as one moves closer to the date of departure. The commission states, ?According to DG, almost every airline has shown increase in number of seats in higher buckets during the period of the strike in comparison to the pre-strike period.? The DG however concluded in its report that ?there is no express or tacit agreement, resulting in cartelisation amongst the airlines.? It also observed that the load factor of other airlines had also increased.
In its order the CCI has said that since the airline companies follow a dynamic pricing hence the service offerred is not only perishable but also the capacity is fixed in advance. ?These two characteristics have bearings upon the pricing strategies of airlines because of possible variations in the opportunity cost of sale.? It has also observed that since the Air India strike increased demand with supply being constrained cost of air fares were bound to increase. Hence it has concluded that hike in air fares between April and May when the Air India workers suspended operations ?was more a result of response of airlines to the factors of general market conditions, seasonality and not due to anti-competitive practices followed by the airlines.?
