Air fare hikes attract MRTPC probe
13 February 2009
The Monopolies and Restrictive Trade Practices Commission (MRTPC) has ordered an investigation probe into the sudden air fare rise by all airlines, including national carrier Air India, on 9 February, even as the Directorate General of Civil Aviation (DGCA) too has directed airlines to justify their "simultaneous" decision to raise ticket prices.
The decision comes soon after strong statements by civil aviation minister Praful Patel against possible cartelisation, after which the DGCA wrote to airlines asking for details of the increases, which have more than doubled base fares. Soon after, Mumbai-based full service carrier Jet Airways re-introduced its special fares of Re 1-300.
According to a senior official of the commission, taking suo motu cognisance based on media reports, the MRTPC has ordered its investigative arm, Director General of Investigation and Registration (DGIR) to conduct a preliminary investigation into the issue. "This is prime facie found to be a restrictive trade practice under section 33 1(d) and 1(j) of the MRTC Act. The Commission has given DGIR 60 days to investigate the matter," said the MRTPC official.
In early 2008, all the airlines under their apex body, Federation of Indian Airlines had decided to levy a minimum fare for all its members. But since 1 January all major domestic carriers had introduced promotional fares, offering tickets as little as Rs 1.
This week all the airlines together rolled back the promotional fares and hiked basic airfares by Rs 2,000-5,000 per ticket depending on the sector. This triggered the MRTPC action.
Although airline executives strongly denied it, industry sources said the price rise was unanimously decided in a meeting of their lobbying body, the Federation of Indian Airlines (FIA), last week.
DGCA said it felt that "there appeared to be no rationale for increasing the air fares", as current jet fuel prices were at the same level as in 2005.