Fines for three Indian carriers over fuel surcharges

0
120
Jet Airways

Indian carriers penalised by the Competition Commission of India (CCI) for their roles in an air cargo price-fixing cartel  on fuel surcharges (FSC) are set to fight the decisions.

On Tuesday 17 November, the CCI fined Jet Airways, IndiGo Airlines and SpiceJet a total of $39 million for engaging in “concerted action in fixing and revising FSC for transporting cargo”.

Air India and GoAir were also part of the CCI’s investigation, but no fines were imposed on the two carriers.

Fines of Indian Rupees (Rs) 151.69 crores ($23 million), Rs. 63.74 crores and Rs. 42.48 crores, were dished out to Jet Airways, IndiGo and SpiceJet, respectively.

The CCI says in a press release on its website the carriers “impugned conduct in contravention of the provisions of section three of the Competition Act, 2002”.

The CCI did not fine Air India as says the airline’s conduct was “not found to be parallel with other airlines”.

No penalty was imposed on GoAir as the CCI says it gave its cargo bellyhold space to third party vendors with no control on any part of commercial and economic aspects of cargo operations done by vendors, including imposition of FSC.

The CCI began the antitrust investigation against the five airlines in 2013 after a complaint was lodged by the Express Industry Council of India, representatives of express courier and freight companies.

The Council complained, as said activities undertaken by Jet Airways, IndiGo, SpiceJet, Air India, and GoAir were in contravention of the Competition Act, 2002, which deals with anti-competitive agreements.

In explaining the decision, the CCI says the airlines: “Acted in parallel in collusion in fixing FSC rates and such conduct resulted in indirectly determining the rates of air cargo transport and were in contravention of the provisions of section three of the Competition Act 2002.”

The CCI explains the decision: “While imposing penalties, the CCI notes that such conduct 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 one per cent of their average turnover of the last three financial years.”

All three airlines are set to contest the fines and a Jet Airways spokesperson tells Air Cargo Week (ACW): “Jet Airways believes that it is not in contravention of the provisions of the Competition Act and shall pursue all available legal steps to defend its position.”

Similarly, a statement from IndiGo to ACW reads: “The company is studying the CCI order and will take legal steps to challenge the order in the appropriate forum.

“The company has been legally advised that it is not in contravention of the provisions of the Competition Act, 2002.”