Competition panel slaps Rs258 crore fine on Jet, IndiGo, SpiceJet
18 November 2015
Clamping down on cartelisation in fixing fuel surcharge on air cargo, the Competition Commission today penalised Jet Airways, IndiGo and SpiceJet with a combined penalty of Rs258 crore.
The three carriers re expected to challenge penalty, say commentators.
A complaint against five carriers was filed in 2013, but the fair trade regulator, however, did not impose any fine on Air India and private carrier GoAir.
Jet Airways is faced with a penalty of Rs 151.69 crore while the fines slapped on InterGlobe and SpiceJet are Rs63.74 crore and Rs42.48 crore, respectively.
IndiGo, the no-frills carrier, is operated by InterGlobe Aviation.
"Jet Airways is not in contravention of the provisions of the Competition Act and it shall pursue all available legal steps to defend its position," a Jet Airways spokesperson commented on CCI order.
According to SpiceJet's corporate affairs general manager Ajay Jasra, the carrier was examining the order and would likely challenge the verdict.
According to an official release the three carriers, Jet Airways, InterGlobe Aviation Ltd and SpiceJet had been penalised for "concerted action in fixing and revising Fuel Surcharge (FSC) for transporting cargo", an official release said.
The fair trade regulator's order follows the apex body of express companies, Express Industry Council of India's (EICI) complaint against the five airlines, under Section 19(1)(a) of the Competition Act.
The penalty, which amounted to 1 per cent of the average turnover of each airline over the last three financial years, was more than the profit of the airlines for a single quarter.
Jet's net profit for the September quarter, for instance, in the current fiscal stood at Rs87.59 crore while that of SpiceJet was Rs23.77 crore.
"The commission noted that the airlines acted in parallel in collusion in fixing FSC rates. Such conduct was found to have resulted in indirectly determining the rates of air cargo transport and thereby in contravention of the provisions of Section 3(1) read with Section 3(3)(a) of the Act," said a note issued by the CCI.
"No penalty, however, was imposed upon Air India Ltd as its conduct was not found to be parallel with other airlines. Similarly, no penalty was imposed upon Go Airlines (India) Ltd as it gave its cargo belly space to third party vendors with no control on any part of commercial / economic aspects of cargo operations done by vendors including imposition of FSC," EICI said in a statement.