Millennium Post

Air passenger body smells cartelisation, takes airlines to CCI

Air Passengers Association of India (APAI) has dragged airlines to the competition watchdog Competition Commission of India (CCI) following a steep 25 per cent hike in air fares in tandem over the past one week, alleging cartelisation by the operators.

In a petition to the competition panel chairman Ashok Chawla on Saturday, the APAI has also accused the domestic carriers of resorting to fare hikes every time around the festive season.

'There has been a hike in the aviation turbine fuel a few days ago and all the airlines have increased the fares by 25 per cent one after the other. This clearly goes to show that a cartel is in operation,' the Chennai-based association president D Sudhakara Reddy said in the petition.
Calling for immediate intervention of the commission, the association said: 'This is not the first time they have increased the fares in tandem and it has become a practice with all these airlines. 'If you notice, it is always done just before the festival season. We strongly believe that this cartel has been acting for the last three-four years.'

Last week, all domestic carriers, including the national carrier Air India and another full-service carrier Jet Airways, apart from the budget-carriers, hiked fares in a quite move by massive 25 per cent, following a 6.9 per cent increase in jet fuel price by oil companies on 1 September as international crude prices shot over $115 a barrel due to the Syrian crisis.

The fare hike was triggered by Chennai-based low-cost carrier SpiceJet, which increased fares by 25 per cent earlier last week, citing rise in input costs in the wake of the rupee fall and the steep spike in ATF prices. It can also be noted that the cash-strapped airline has been put on a cash-n-carry mode by airport operators since the past few weeks.

Jet too increased fares by a similar quantum. Market leader IndiGo and other budget carrier GoAir also followed suit with similar hike in fares.
However, none of the airline, including the listed ones - Jet and SpiceJet - has so far bothered to issue any official statement on the hike, including informing the exchanges, in sharp contrast to the ad blitzkrieg they resorted to when they announced special low fares earlier this year. They have also declined to take media queries on the issue.

Bringing to the commission's notice that airlines did not even give any notice before the hike unlike when they lower fares, the association said, 'Most of their announcements about the fare increase come to effect immediately.'
The association further said: 'We would like to request you to conduct a detailed enquiry and ensure that cartelisation does not continue and justice is done to the travelling public.'

Noting that the carriers fly many models of aircraft with varying fuel intake, the association said that 'as against this, they have increased the fares uniformly'.

Ironically, there is neither a regulatory mechanism to monitor pricing mechanism at present nor do airlines disclose various components in airfare structure in a very transparent manner.Earlier in July, aviation minister Ajit Singh had reportedly talked about commissioning of an economic cell in the ministry to monitor the pricing mechanism.

'The airfare monitoring cell is ready and will soon be commissioned under the aegis of the ministry. The economic cell would analyse data on tickets sold by airlines under different price buckets and make the information public to bring in transparency in airfare pricing,' he had said.
'In case there are discrepancies, it would be referred to the CCI,' the minister had said.
However, the cell is yet to begin to function.

The cell will help keep in check random increases in fares and predatory pricing by making it mandatory for all airlines to disclose data on fuel surcharge and taxes being levied on tickets to keep a tab on the correlation between seats availability, fare offered, taxes levied and the final pricing of the tickets.
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