9 foreign airlines cleared of cartelisation charge

The investigation wing of the Competition Commission of India (CCI) has cleared nine foreign airlines of cartelisation and abuse of dominant position charges, pressed by the Travel Agents Association of India (TAAI).

The report of the Director General (Investigations) was given to CCI on January 27, and this will form the basis of further hearings of the fair trade watchdog. The next hearing of CCI is on March 3.

TAAI had approached CCI in December 2009 after the airlines — Lufthansa German Airlines, Continental Airlines, KLM Royal Dutch Airlines, Swiss International Airlines, Singapore Airlines, Air Canada, Air France and North West Airlines — announced their decision to end the practice of giving commissions to travel agents for ticketing services.

In its petition to CCI, the association alleged the decision to reduce the “Standard Agency Commission” from five per cent to zero from November 1, 2009 was an anti-competitive move. It also said the airlines were part of two international networks, Star Alliance Network and Sky Team Alliance, thereby pointing towards a potential cartelization that led to the joint decision.

After investigating the matter for over a year, CCI’s investigation wing concluded that with a 17 to 20 per cent combined market share, these airlines cannot be said to be dominant players in the international flying market from/to India. “The respondent airlines also do not enjoy any commercial advantage over their competitors, neither their consumers are dependent on them, nor they have acquired any monopoly. Therefore, the airline companies cannot be termed as dominant enterprises in the relevant market,” the report said.

The counsel for TAAI said the “commission is a legitimate right of a travel agent” and the Aircraft Act, 1934 defines “tariff” as any fare, rate or charge collected by airlines, which include commission payable to agents. He said TAAI had appealed to CCI to make the civil aviation ministry and the Director General of Civil Aviation parties to the case.

CCI had rejected at least two cases involving travel agents and airline companies at the primary stage itself. They have appealed against these orders in the Competition Appellate Tribunal.