CCI Dismisses Allegation of Cartelization Against Jet Airways, Spice Jet, Indigo, Go Air, and Air India

On June 3, 2021, CCI dismissed allegations of cartelization against Jet Airways (India) Limited (‘Jet Airways’), SpiceJet Limited (‘Spice Jet’), InterGlobe Aviation Limited (‘Indigo’), Go Airlines (India) Limited (‘Go Air’) and Air India Limited (‘Air India’). [1]

The informant had alleged that during the period of the Jat Agitation in February 2016, domestic airline ticket prices skyrocketed, mainly between Delhi-Chandigarh and Delhi-Amritsar routes. The informant submitted that there had been a trend in the aviation industry that airlines had increased their ticket prices to exploit passengers during extraordinary conditions such as the Chennai Floods and the Nepal earthquake.

After assessing the data, CCI took the prima facie view that there had been a general increase in the ticket prices in certain routes, especially in respect of tickets sold close to the Jat Agitation period and that this increase operated within a small time-frame. Additionally, CCI noted that with the use of algorithms, there exists a high possibility of collusion without the need for coordination or human intervention. Accordingly, CCI directed an investigation into the alleged cartelization by Jet Airways, SpiceJet, Indigo, GoAir, and Air India.

Upon completion of the DG’s investigation, CCI opined that that Section 3(3) of the Act required the presence of an ‘agreement’, the establishment of which would require some explicit or tacit arrangement between the parties. Such arrangement may be in the form of communications/emails, or oral or written formal or informal communication, as well as through parallel conduct which cannot be otherwise explained. CCI noted that based on a review of email dumps of the airlines during the investigation, no such emails were found which could show any exchange of information amounting to collusion during or after the period of the agitation.

CCI further noted that during the investigation, the DG did not come across any evidence which could establish concerted behavior. The DG analysed aviation data to detect any pattern indicative of price parallelism, as well as: (i) the total revenue generated by each airline; (ii) average price per ticket; (iii) booking dates; (iv) number of buckets used; and (iv) the number of seats sold and unsold for six sectors namely, Delhi-Amritsar, Amritsar-Delhi, Delhi-Jaipur, Jaipur-Delhi, Delhi-Chandigarh, and Chandigarh-Delhi during the relevant period. The investigation revealed that all six sectors witnessed high demand for air tickets since alternate modes of travel were unavailable due to the Jat Agitation. However, the investigation did not reveal any price parallelism or identical pricing by the airlines for any of the abovementioned sectors.

Additionally, CCI noted that the DG did not find any uniformity with regard to total revenue, average ticket price, peak demand, classification of fare buckets, seating capacity or openings. Further, CCI noted that the airlines use different ticket pricing software as well as different custom-made algorithms suited for the specific needs of each airline.

Based on the above, CCI found no evidence to establish a cartel amongst the airlines during the period of the Jat Agitation and ordered the matter to be closed.

 

[1] Case No. 32 of 2016, Order dated June 3, 2021.

Published In:Inter Alia Special Edition - Competition Law - September 2021 [ English
Date: September 16, 2021