CCI imposes penalty on Jet Airways (India) Ltd., InterGlobe Aviation Ltd. and Spice Jet Ltd. of Rs. 39.81 crore, Rs. 9.45 crore and Rs. 5.10 crore respectively. CCI imposes penalty on these 3 Airlines for concerted action in fixing and revising Fuel Surcharge (FSC) – a component of freight charges and issues cease and desist order.
Express Industry Council of India filed an application before CCI alleging cartelisation against the mentioned airlines. Thereafter CCI holds that airlines acted in a concerted manner in fixing and revising the FSC rates and thereby contravened Section 3 of Competition Act, 2002 which prohibits anti-competitive agreements including cartels.
CCI further mentions that while imposing penalty, principle of relevant turnover has been applied. In addition, penalty are based on the revenue generated by the Airlines from air cargo transport services only. Thereafter, CCI mentions that it has imposed 3 % of average relevant turnover of the last three financial years considering the financial position of Airlines at the relevant time and noting that FSC constitutes about 20-30% of cargo revenue.
CCI further deprecates the Airlines for using FSC as a pricing tool which was essentially introduced to mitigate the fuel price volatility.