CCI summons airline heads to explain spurt in air fare

The sudden spurt in prices of domestic air tickets, triggered by the employees' strike in the state-run Air India, have come under scrutiny of the anti-competition watch dog Competition Commission of India (CCI).

The investigation wing of CCI, headed by its director-general (DG), has asked senior executives of all low-cost airlines to explain the price increase that took place in the last 10 days. Around 800 pilots of Indian Commercial Pilots Association (ICPA), a union of erstwhile Indian Airlines pilots, are on strike since April 27 demanding pay parity with their Air India counterparts.

While the chief executive officer of GoAir is known to have explained his airlines' position today, several senior executives from other private airlines such as SpiceJet and Jet Airways have deposed before the investigation officer in the last few days.

GoAir’s CEO did not respond to phone calls and text messages. A SpiceJet executive declined to comment. “We have not been called by the CCI on the alleged fare increase issue following the Air India strike,” said a senior SpiceJet executive, who did not want to be identified. “The airlines said, about 20 per cent of their seats come within the high-price bracket. But how can they increase the price across all slabs?” a source close to the development asked.

Air India is the fourth largest carrier in terms of passengers and commands 15 per cent of the domestic market. With the strike taking back all the capacity from the market, the competitor airlines raised fares by up to 30 per cent.

The Directorate General of Civil Aviation, the aviation regulator, also called a meeting of the airlines asking them not to take benefit of the strike and raise fares.Even before the current price spurt happened, CCI’s investigation wing was probing airline the pricing pattern after prices showed a steep rise last November.

If the thrust of the initial investigation, which started in December 2010, was to see if there was an airline cartel among all domestic players to jack up the price, the current attempt is to understand if there has been an anti-competitive practice that is against individual consumer interest in play.

When contacted, the director-general of CCI declined to comment.

Meanwhile, taking suo-motu cognizance of the sudden rise in airfares by private airlines, the Parliament’s Standing Committee on Finance today decided to summon CCI Chairman Dhanendra Kumar to explain this alleged “cartelisation”.