Airlines in India receive fines for fixing fuel surcharges

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The Competition of India (CCI) has fined three airlines for fixing and revising fuel surcharges on cargo operations.

The order was passed on information filed by Express Industry Council of India against Jet Airways, InterGlobe Aviation, Spice Jet, Air India and Go Airlines alleging cartelisation.

The CCI says that the airlines acted in a concerted manner in fixing and revising fuel surcharge rates, with Jet Airways receiving a 39.81 crore penalty ($6.1 million), InterGlobe was hit with a 9.45 crore fine and Spice Jet received a 5.1 crore penalty, and all were issued with a cease and desist order.

While imposing penalties, the Commission applied the principle of relevant turnover and based penalties on the revenue generated from air cargo transport services.

The CCI considered the financial positions of the airlines at the time, noting that the fuel surcharge constitutes about 20-30 per cent of cargo revenue, with the penalty being imposed at three per cent of average relevant turnover over the last three financial years.

The commission says it does not approve of airlines using fuel surcharges as a pricing tool to mitigate the fuel price volatility.