Jet Airways, InterGlobe Aviation And Spicejet Fined For Cartelisation

| March 8 , 2018 , 15:06 IST

Three airline companies namely Jet Airways, InterGlobe Aviation and Spicejet were fined by the Competition Commission of India for cartelisation in fixing and revising fuel surcharge (FSC) on cargo transport.

The commission passed the order based on a complaint filed by the Express Industry Council of India against Jet Airways, InterGlobe Aviation Limited, Spice Jet Limited, Air India Limited and Go Airlines (India) Limited. The complainant alleged that these airlines engaged in cartelisation.

The Commission ruled that these airlines did act in a concerted manner in fixing and revising the Fuel surcharge rates. In doing so the airlines violated the provisions of the Competition Act that specifically prohibits any anti-competitive agreement including cartels. 

The Commission announced penalties of Rs 39.81 crores on Jet Airways, Rs 9.45 crores on InterGlobe Aviation Limited and Rs 5.10 crores on Spice Jet Limited along with a cease and desist order.

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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. The commission imposed penalties at 3 percent of the average relative turnover of the last three financial years. The commission noted took into account the financial position of the airlines at the relevant time and the fact that FSC constitutes around 20-30 percent of cargo revenue.

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