Anti-trust body, regulator ask airlines to explain fare hikes (Roundup)

February 12th, 2009 - 8:04 pm ICT by IANS  

New Delhi, Feb 12 (IANS) India’s anti-trust body as well as the aviation regulator Thursday questioned domestic airlines’ decision to hike fares at a same time and warned them against “cartelisation”.
The Monopolies and Restrictive Trade Practices Commission (MRTPC) Thursday ordered a probe on airlines for hiking fares.

The MRTPC’s investigative arm, the Director-General of Investigation and Registration (DGIR), has been asked to probe the issue, its spokesperson said, and added that it had taken a suo-moto action following newspaper reports in this regard.

“It appears to be a case of cartelisation and the DGIR would look if airlines have formed cartel and increased fare at the same time. This should not have happened as the aviation fuel prices have also come down and reached the price level which was prevalent in 2005,” the official told IANS.

The MRTPC spokesperson said the agency was yet to submit its findings on the high-profile alliance between Kingfisher Airlines and Jet Airways in October last year.

Sensing that the two airline could have formed a cartel, the agency had ordered a probe Oct 17 after the operators entered into an alliance for code-sharing on both international and domestic flights apart from looking at joint network rationalisation.

Earlier in the day, the aviation regulator, Directorate General of Civil Aviation (DGCA), asked airline operators to explain the reason for hiking fares and the measures that would be taken to maintain transparency in airfare advertising.

The DGCA in a statement said: “All domestic airlines had increased their airfares simultaneously in the second week of February. The DGCA is not aware of the reasons for this, specifically at a time when the ATF (aviation turbine fuel) prices, which were effective from February 1, are at the level that they were in 2005.”

Saying that it felt there appeared to be “no rationale for increasing the airfares”, the DGCA added that all airlines would have to furnish detailed information and justification behind the fare hike by Saturday.

The DGCA noted that airfares displayed on the websites of the airline operators comprise - apart from the basic fare - several components such as fuel surcharge, congestion charge and passenger service fee (PSF), “all loosely labelled as taxes”.

The move comes two days after Indian carriers, including budget airlines, withdrew promotional fares and hiked base tariff. Among them was the state-owned Air India, which only months earlier announced a Rs.99 base promotional fare on domestic routes.

After the Civil Aviation Minister Praful Patel warned airlines against “cartelisation” Wednesday, low-cost carrier JetLite introduced a promotional base fare of Re.1 on sectors that included premier routes: Delhi-Mumbai, Delhi-Hyderabad and Mumbai-Chennai routes. Air fuel and other surcharges were, however, extra.

JetLite’s parent carrier Jet Airways too announced a promotional base fare of Rs.300 on the Mumbai-Ahmedabad, Mumbai-Goa, Delhi-Jaipur, Delhi-Srinagar, Kolkata-Bagdogra, Kolkata-Jorhat, Chennai-Kochi, Chennai-Hyderabad and Hyderabad-Indore sectors.

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