India’s anti-monopoly body to probe Kingfisher-Jet alliance

October 20th, 2008 - 4:20 pm ICT by IANS  

New Delhi, Oct 20 (IANS) India’s trade practices watchdog has decided to investigate whether Kingfisher Airlines and Jet Airways are violating anti-trust laws through their code-sharing and operational alliance, a government official said here Monday.The Monopolies and Restrictive Trade Practices Commission (MRTPC), a quasi-judicial anti-monopoly body, had told IANS last week that the alliance prima facie looked like a case of restrictive trade practice, but that it would wait and watch before initiating a probe.

However, it has now asked the Director General of Investigations and Registration (DGIR), its investigative arm, to probe the alliance and submit a report in 60 days.

“We are issuing notices to the airlines to explain their position,” DGIR additional director general S.P. Dev told IANS. “We will study the deal between the airlines and see if it violates the norms of the MRTPC.”

Dev said the DGIR would investigate whether the alliance was aimed at forming a cartel or whether the two carriers would hike fares.

Explaining the decision, MRTPC joint director I.S. Sain says cartelisation cannot be ruled out.

“If the carriers hike fares, it definitely calls for action, as this will mean they are heading for cartelisation,” Sain told IANS, adding the two carriers will have to ensure that they will not engage into any form of cartelisation to influence the sector.

Following the alliance, the market share of Jet Airways and Kingfisher Airlines group has gone up to over 58 percent, based on official figures for July, while that for state-run rival Air India remains at 18.4 percent.

Cartelisation is a process where players in an industry act in concert to stifle competition and monopolise the market, with a combination of mergers, acquisitions of alliances.

The two airlines announced a code-sharing and operational alliance Oct 14 in a bid to cut costs and remain in the black with shared ground handling, flight crew and training of crew.

In February, the commission had cracked its whip on low-cost carriers and initiated a probe into possible cartelisation by budget airlines.

Dev said the DGIR is proceeding with the case against SpiceJet, Indigo and other low cost carriers.

“They (low-cost airlines) have been found exploiting consumers with unnecessary charges, non-refund of fares and other anomalies, which calls for action,” said the deputy head of the DGIR.

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