CCI lens on algorithms used for air ticket prices
New Delhi: Competition Commission plans to assess algorithms used by domestic airlines for ticket pricing to check for possible cartelisation, a top official said on Friday amid instances of sharp fluctuations in airfares during peak demand.
The watchdog, which keeps a tab on unfair business practices across sectors, has been looking into the issue after the Jat agitation in early 2016 when ticket prices on Chandigarh to Delhi flights shot up sharply.
Competition Commission of India (CCI) Chairperson D K Sikri said that the regulator is looking at how algorithms function when it comes to pricing of air tickets in order to check for possible cartelisation. He was speaking on the sidelines of a conference organised by industry body Assocham.
In his speech at the conference, Sikri said collusion among digital players through self-learning algorithms is one of the biggest challenges that is being faced by competition law enforcers.
Citing the sudden rise in airfares for flights between Chandigarh and Delhi during the Jat agitation, he wondered how can it happen.
"We asked the airlines. (They said) we don't know, the algorithms are driving it up. What are algorithms? These are not kind of systems that are moving on their own. Somebody has designed them, logic has been put into it...," Sikri said.
"They (airlines) say we have these indicators, variables but they are not showing the weightage given to them. So we are talking to a lot of technical people... how do we bring them down to understanding these algorithms," he noted.
According to him, one suggestion was for the CCI to develop its own algorithm to look at the issue but that would require huge investment.
Another suggestion, he said, was to develop a hypothesis and "tell them (airlines) to satisfy the hypothesis with your algorithm. If it fails, hold them responsible".
Meanwhile, Sikri emphasised that dominance per se is not an anti-trust concern and that is true even in the data-driven digital markets.
"We understand that as competition authorities, data rich companies are not an economic threat in themselves. They are a source of innovation but the practices of dominant digital players must be competition (norms) compliant," he said. MPOST