India’s anti-monopoly body watching Jet, Kingfisher dealOctober 15th, 2008 - 3:45 pm ICT by IANS
New Delhi, Oct 15 (IANS) Action will be initiated against Kingfisher Airlines and Jet Airways under India’s anti-trust laws if they hike fares in tandem after their recent strategic and operational alliance, a top official of a quasi-judicial watchdog said here Wednesday.”We cannot rule out the possibility of cartelisation following the alliance between two major Indian private air carriers,” said I.S. Sain, joint director with the Monopolies and Restrictive Trade Practices Commission (MRTPC).
“If they hike fares, it definitely calls for an 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.
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.
In a development unique in Indian aviation space, Jet Airways and Kingfisher announced a code-sharing and operational alliance late Tuesday in a bid to cut costs and remain in the black with shared ground handling, flight crew and training of crew.
The MRTPC official said the commission will discuss the issue internally with concerned departments, as the alliance prima facie looked like a case of restrictive trade practice and go against the interest of consumers.
“But we will watch before initiating any probe.”
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.
In February, the commission had cracked its whip on low-cost carriers and initiated a probe into possible cartelisation by such budget airlines.
The commission also probed the role of carriers and their umbrella organisation, the Federation of Indian Airlines, in fixing the fares, which had been fixed at a minimum if Rs.500 to improve their bottom lines.
The commission suspected that by using the federation, the carriers had eliminated fair competition in the sector and deprived travellers of low-cost promotional fares. The commission is yet to give its final report in the matter.