CCI imposes penalties of Rs.258 crore on three airlines

The fair business practices regulator on Tuesday imposed penalties totalling Rs.258 crore on three airlines which were found to have acted in a concerted manner to fix and revise fuel surcharge (FSC) prices for transporting cargo.

The Competition Commission of India (CCI) imposed penalties on Jet Airways, InterGlobe Aviation which is the mother company of low cost carrier (LCC) IndiGo and budget airline SpiceJet for indulging in anti-competitive practices.

According to the fair practices regulator, the penalties were imposed in response to a case filed by Express Industry Council of India against Jet Airways, InterGlobe Aviation, SpiceJet, Air India and GoAir for entering into anti-competitive agreements.

"Commission noted that the airlines acted in collusion in fixing FSC rates. Such conduct was found to have resulted in indirectly determining the rates of air cargo transport," the CCI was quoted in a statement.

Accordingly, the CCI imposed penalties amounting to Rs.151.69 crore, Rs.63.74 crore and Rs. 42.48 crore on Jet Airways, InterGlobe Aviation and SpiceJet, respectively.

"No penalty, however, was imposed upon Air India, as its conduct was not found to be parallel with other airlines," the statement said.

"Similarly, no penalty was imposed upon Go Airlines, as it gave its cargo belly space to third party vendors with no control on any part of commercial aspects of cargo operations done by vendors including imposition of FSC."

Furthermore, the CCI noted that such conduct in the air cargo industry undermines economic development of the country and ultimately acts as a detriment to end consumers.

In addition, the CCI said that it imposed modest penalties on the airlines, considering their weak economic position.

"Considering the precarious financial position of airlines, the penalty was imposed by the commission at the rate of one percent of their average turnover of the last three financial years," the statement added.