CCI penalises Jet Airways, InterGlobe Aviation, SpiceJet for unfair biz practices

The watchdog has imposed a fine of Rs 39.81 crore on Jet Airways while the penalties on InterGlobe Aviation and SpiceJet are Rs 9.45 crore and Rs 5.10 crore, respectively.

CCI penalises Jet Airways, InterGlobe Aviation, SpiceJet for unfair biz practices

New Delhi: The Competition Commission has slapped a total penalty of more than Rs 54 crore on three airlines –Jet Airways, SpiceJet and InterGlobe Aviation – for carrying out unfair business practices like fixing and revising Fuel Surcharge (FSC) - a component of freight charges.

The watchdog has imposed a fine of Rs 39.81 crore on Jet Airways while the penalties on InterGlobe Aviation and SpiceJet are Rs 9.45 crore and Rs 5.10 crore, respectively.

The penalties translate to three percent of the respective airlines' average turnover earned from levy of FSC (Fuel Surcharge) on the volume of cargo handled for the three-year period -- 2010-11, 2011-12 and 2012-13.

The Competition Commission of India (CCI) said penalties have been imposed on the airlines for "concerted action in fixing and revising FSC - a component of freight charges".

The order has been passed on a complaint by Express Industry Council of India against the airlines alleging cartelisation. It was filed against five airlines -- Jet Airways, InterGlobe Aviation, SpiceJet, Air India and GoAir.

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 Airlines at the relevant time and noting that FSC constitutes about 20-30 percent of cargo revenue, penalty was imposed by the Commission at 3 percent of their average relevant turnover of the last three financial years.  

The CCI deprecated the Airlines for using FSC as a pricing tool which was essentially introduced to mitigate the fuel price volatility.

 

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