Fair trade regulator CCI has rejected complaints that the government's Leave Travel Concessions (LTC) policy was resulting in anti-competitive practices at the airlines, including state-run Air India.
The Government is the main shareholder of Air India and its subsidiaries Alliance Air and Air India Express.
The complaint is made by one Yeshwanth Shenoy, who is a consultant with different ministries to the Central Government, alleging that he was forced by central government through its policy directives to avail the air travel services offered by Air India at a price which was much higher than those offered by its competitors in the market.
Further, it alleged that government, through its policy initiatives, has ensured that Air India enjoys the benefits of having a captive customer base comprising of the government employees together with their dependants who undertake air travel under Leave Travel Concession.
It has been alleged that in addition to direct financial assistance, government also provides indirect financial support to Air India through its various office orders mandating its employees to exclusively use the air travel services provided by the airline with exception in the routes where the carrier has no operations.
Besides, it was alleged that private airlines such as Jet Airways, Spicejet Airlines, Indigo Airlines, Go Air Airlines and Vistara Airlines remained silent which may be attributed to a cartel amongst them or because of the fear of a regulatory backlash from the government.
The Competition commission said that government is the consumer of air travel services as the tickets purchased under the LTC Scheme are funded by it.
Further, as a consumer of air travel services, government enjoys the liberty to exercise its choice even if such exercise of choice causes a favourable treatment for Air India or other player operating in the market.
Thus, no case is made out against government under any of the provisions of the Act, Competition Commission of India (CCI) said in an order dated January 6.
"Furthermore, once the OP 2 (government)has exercised its free choice to avail the services of OP 1 (Air India) the allegation of abuse for charging excessive (unfair) price against OP 1 also does not hold," it said.
"The Commission finds that no case of contravention of the provisions of either section 3 or 4 of the Act is made out against the Opposite Parties. Accordingly, Commission decides to close the matter," it added.
Section 3 of the Competition Act pertains to anti-competitive practices while section 4 is related to abuse of dominant position.