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CCI slaps penalty on top air carriers for cargo fee collusion

By PTI
17 November, 2015

Clamping down on unfair business practices in the aviation sector, Competition Commission today slapped penalties totalling Rs 258 crore on Jet Airways, IndiGo and SpiceJet for cartelisation in fixing fuel surcharge for transporting cargo.

However, the fair trade regulator did not impose any penalty on national airline Air India and private carrier Go Airlines, which were also named in a complaint filed by Express Industry Council of India.

The Competition Commission of India (CCI) has penalised three carriers — Jet Airways, InterGlobe Aviation Ltd and SpiceJet — for “concerted action in fixing and revising Fuel Surcharge (FSC) for transporting cargo”, according to an official release.

While a penalty of Rs 151.69 crore has been imposed on Jet Airways, the fines slapped on InterGlobe and SpiceJet are Rs 63.74 crore and Rs 42.48 crore, respectively.

InterGlobe Aviation operates no-frills carrier IndiGo.

These carriers have also been directed to cease and desist from indulging in anti-competitive practices.

There were no immediate comments from any of the airlines on the CCI order.

The regulator found that the three airlines colluded in fixing FSC rates.

Such conduct was found to have resulted in indirectly determining the rates of air cargo transport and thereby contravening Section 3 of the Competition Act. This section pertains to anti-competitive agreements, the release said.

“No penalty, however, was imposed upon Air India Ltd as its conduct was not found to be parallel with other airlines.

“Similarly, no penalty was imposed upon Go Airlines (India) Ltd as it gave its cargo belly space to third party vendors with no control on any part of commercial/economic aspects of cargo operations done by vendors including imposition of FSC,” the release said.

The ruling has come on a complaint filed by Express Industry Council of India, which alleged that the five airlines indulged in anti-competitive practices.

According to CCI, such anti-competitive ways in the air cargo industry undermines economic development of the country and ultimately acts to the detriment of end-consumers.

“However, considering the precarious financial position of airlines, the penalty was imposed by the Commission at the rate of one per cent of their average turnover of the last three financial years,” the release said.


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CCI slaps penalty on top air carriers for cargo fee collusion

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