CCI imposes penalty on Jet, SpiceJet, IndiGo
The Competition Commission of India (CCI) on Thursday imposed penalties on Jet Airways (India) Ltd., InterGlobe Aviation Limited (IndiGo Airlines), and Spice Jet Limited for concerted action in fixing and revising Fuel Surcharge (FSC) on cargo transport, which is a component of freight charges, a notification from Finance Ministry said.
Penalties of Rs. 39.81 crore, Rs. 9.45 crore and Rs. 5.10 crore was imposed upon Jet Airways, Indigo Airlines, and SpiceJet respectively.
Besides, a cease and desist order was also issued against the airlines.
The final order was passed by CCI today on an information filed by Express Industry Council of India against Jet Airways (India) Ltd., InterGlobe Aviation Limited, Spice Jet Limited, Air India Limited and Go Airlines (India) Limited alleging cartelisation.
CCI noted in its order that the above-mentioned airlines acted in a concerted manner in fixing and revising the FSC rates and thereby contravened the provisions of Section 3 of the Act which prohibits anti-competitive agreements including cartels.
While imposing penalties, the Commission applied the principle of relevant turnover and based the penalties on the revenue generated by the airlines from air cargo transport services only.
Considering the financial position of the airlines at the relevant time and noting that the FSC constitutes about 20 to 30 percent of cargo revenue, penalty was imposed by CCI at three percent of their average relevant turnover of the last three financial years.
Further, CCI deprecated the airlines for using FSC as a pricing tool which was essentially introduced to mitigate the fuel price volatility.
Penalties of Rs. 39.81 crore, Rs. 9.45 crore and Rs. 5.10 crore was imposed upon Jet Airways, Indigo Airlines, and SpiceJet respectively.
Besides, a cease and desist order was also issued against the airlines.
The final order was passed by CCI today on an information filed by Express Industry Council of India against Jet Airways (India) Ltd., InterGlobe Aviation Limited, Spice Jet Limited, Air India Limited and Go Airlines (India) Limited alleging cartelisation.
CCI noted in its order that the above-mentioned airlines acted in a concerted manner in fixing and revising the FSC rates and thereby contravened the provisions of Section 3 of the Act which prohibits anti-competitive agreements including cartels.
While imposing penalties, the Commission applied the principle of relevant turnover and based the penalties on the revenue generated by the airlines from air cargo transport services only.
Considering the financial position of the airlines at the relevant time and noting that the FSC constitutes about 20 to 30 percent of cargo revenue, penalty was imposed by CCI at three percent of their average relevant turnover of the last three financial years.
Further, CCI deprecated the airlines for using FSC as a pricing tool which was essentially introduced to mitigate the fuel price volatility.