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Penalized airlines in India likely to challenge Competition Commission of India Order

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Indigo
Photo: http://www.bangaloreaviation.com

New Delhi: All three airlines, penalized by the fair business practices regulator on Tuesday, said they were considering to challenge the order that found them indulging in anti-competitive agreements.

The development comes after the Competition Commission of India (CCI) penalized Jet Airways, InterGlobe Aviation which is the mother company of low cost carrier (LCC) IndiGo, and SpiceJet for indulging in anti-competitive practices.

All three airlines were fined a total of Rs.258 crore for acting in a concerted manner to fix and revise fuel surcharge (FSC) prices for transporting cargo.

Budget passenger carrier SpiceJet said that it was considering to challenge the order.

“We are currently studying the order. We are likely to challenge the order,” a company spokesperson told IANS.

A penalty of Rs.42.48 crore was imposed on SpiceJet.

LCC IndiGo was quoted in a statement that the company is studying the CCI order and will take legal steps to challenge it in the appropriate forum.

“The company has been legally advised that it is not in contravention of the provisions of the Competition Act, 2002,” the IndiGo statement said.

The order penalized InterGlobe Aviation with a fine of Rs.63.74 crore.

A Jet Airways spokesperson said: aceJet Airways is not in contravention of the provisions of the competition act and shall pursue all available legal steps to defend its position.

Jet Airways was fined Rs.151.69 crore in the matter.

On Tuesday, the fair practices regulator, imposed penalty on all three airlines in response to a case filed by the Express Industry Council of India against Jet Airways, InterGlobe Aviation, SpiceJet, Air India, and GoAir for entering into anti-competitive agreements.

“Commission noted that the airlines acted in collusion in fixing FSC rates. Such conduct was found to have resulted in indirectly determining the rates of air cargo transport,” the CCI was quoted in a statement.

Accordingly, the CCI imposed penalties amounting to Rs.151.69 crore, Rs.63.74 crore and Rs.42.48 crore on Jet Airways, InterGlobe Aviation and SpiceJet, respectively.

“No penalty, however, was imposed upon Air India, as its conduct was not found to be parallel with other airlines,” the statement said.

“Similarly, no penalty was imposed upon Go Airlines, as it gave its cargo belly space to third party vendors with no control on any part of commercial aspects of cargo operations done by vendors including imposition of FSC.”

Furthermore, the CCI noted that such conduct in the air cargo industry undermines economic development of the country and ultimately acts as a detriment to end consumers.

In addition, the CCI said it imposed modest penalties on the airlines, considering their weak economic position.

“Considering the precarious financial position of airlines, the penalty was imposed by the commission at the rate of one percent of their average turnover of the last three financial years,” the statement added.

(IANS)

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Indian Railways Are No More Popular Mode of Transport in India

Airlines are soon to replace railways as a popular mode of conveyance as the number of passengers traveling via air will exceed the AC passengers in 2019-2020

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Indian Railways
Indian Railways. Wikimedia Commons
  • Indian Railways get aggressive competition from Airways, as Airways to become popular mode of transportation in 2019-2020
  • Augmenting the pricing and capacity can save the downfall of Indian Railways
  • Indian Railways fares not as unfair as people make them out to be

New Delhi, August 03, 2017: Reportedly, the aviation sector is said to grow in 2019-2020 as the Indian Railways prices continue surging. Recently in a blueprint laid out by Indian Railway, it was mentioned that the number of passengers traveling by air would exceed AC-class passengers in 2019-20.

Indian railways and domestic airlines carried about 145 million and 97.8 million passengers respectively between December 2015 and November 2016. With a projected 20% growth in air passengers and 5% growth in rail AC-class passengers between December 2015-November 2016 and 2019-20, it is estimated that air passengers will outnumber rail AC-class passengers soon.

As the Indian railways surged the price on the base fares of Shatabdi, Rajdhani and Dhuranto trains last year giving leverage to the aviation sector. The base fare of these railways was raised on the basis of selling capacity as recommended on Railway Board formula, the base fares would increase by 10 per cent with every 10 per cent of train berths sold.

While the railway’s fares went remarkably high, Air India announced that the last minute fares won’t be raised making the last minute booking before take-offs at par with AC rail fare. All the airlines have followed similar fare patterns and therefore reducing airfares, the shift of 2AC and 1AC rail passengers to Airlines have increased remarkably since. Leading to this alarming state of affairs for Indian Railways, 3AC still remain unaffected because even the Tatkal bookings are lower than the last minute air fares.

Can Indian Railways still beat the growing Airline Traffic? Click To Tweet

The two factors by which Indian Railways can still gain traction and recovery by 2020 are through augmenting capacity and pricing. Although Indian railway has been leveraging its track capacity at a rate of 7km per day since 2015, it cannot be augmented to a level that can stop the growing aviation sector from mangling the rail AC passenger segment by 2019-20. Hence, Indian railways can hardly do anything till 2020 when both dedicated freight corridors are commissioned, relieving sizeable capacity for railways.

Pricing and travel time, are two most important factors that can affect the passenger segment of Indian railways. Talking about pricing, the railway pricing is not as simplistic as it is made out to be. The costing of air carriers are significantly more than 1AC/2AC rail and considering that more than half air tickets are sold within two weeks the departure, despite the flexi-rates, there is a huge difference between the railways and air fares. However, the air fare for tickets that were booked at least two weeks before the travel day may be in the range of 1AC/2AC rail fares. Taking the price factor in regard Indian Railways are doing well and should have no concerns on this front.

Also Read: “Better than London” free WiFi on Indian Railways stations! RailTel and Google are making it happen at 400 locations

While travel time is of the essence to the passengers and not the authorities, and the only alternative to combat the huge difference of time saved in airlines compared to railways, should not be bullet trains. While major routes like Delhi-Bombay have access to electric tracks and serve under “A” category of railways, they still need to up the speed of express trains which run at the maximum speed of 160kmph/130kmph. The speed of these trains can be increased up to 110kmph which 80% of the maximum speed, there will be a lot of time that could be saved benefiting the 6PM-8AM trains which do not enter the slab of productive hours.

Indian railways can tweak their options to gain the leverage over the aviation sector, which is said to overtake in 2019-2020.

-Prepared by Nivedita Motwani. Twitter @Mind_Makeup


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SriLankan Airlines to add 3 new Indian cities Hyderabad, Coimbatore and Visakhapatnam to its network from July

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SriLankan_Airlines, Wikimedia

New Delhi, May 13, 2017: SriLankan Airlines, the national carrier of the island nation, will add three southern India cities — Hyderabad, Coimbatore, and Visakhapatnam — to its network from July, a statement said here on Saturday.

According to the statement, the flights will commence from July 8.

“The introduction of these new routes, along with the scheduled frequency increases in its Delhi and Mumbai services, will see SriLankan operating over 120 flights a week to 14 cities, thus becoming the carrier that serves the highest number of points in India,” the airline said.

Currently, the airline serves key Indian cities such as New Delhi, Mumbai, Chennai, Bengaluru, Tiruchirappalli, Trivandrum, Kochi, Madurai, Varanasi and Bodh Gaya, and will introduce four additional frequencies to its daily services from Delhi and Mumbai in July.

The statement said the new routes will be serviced by Airbus 320/321 aircraft.

“These new routes are introduced with the aim of providing passengers with added convenience, seamless travel and easy onward connectivity from Colombo,” it said.

SriLankan Airlines is a member of the Oneworld airline alliance, being the first airline from the Indian sub-Continent to join any global airline alliance. (IANS)

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Union Cabinet chaired by PM Modi approves signing of Air Services Agreement between India and Fiji

The Agreement is for updating of the existing Air Services Agreement (ASA) between the two countries which was signed on 28th January 1974

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PM Narendra Modi with PM of Fiji Frank Bainimarama. newsroompost.com

NEW DELHI, August 24, 2016: The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for signing of new Air Services Agreement (ASA) between India and Fiji.

The Agreement is for updating of the existing Air Services Agreement (ASA) between the two countries which was signed on 28th January 1974. The update is as per latest ICAO template keeping in view the latest developments in the civil aviation sector and with an objective to improve the air connectivity between the two countries.

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A draft text of Air Service Agreement has been finalized in consultation with Ministry of Law & Justice (Department of Legal Affairs), Ministry of Finance (Department of Economic Affairs, Department of Revenue), Ministry of External Affairs, Department of Commerce and Ministry of Tourism.

The essential features of the Air Services Agreement are as follows:

i. Both countries shall be entitled to designate one or more airline.

ii. The designated airlines of either country shall have the right to establish offices in the territory of the other country for the promotion and sale of air services.

iii. The designated airlines of the two countries shall have fair and equal opportunity to operate the agreed services on specified routes. The routes and frequencies shall be decided subsequently.

iv. The designated airline will be free to decide tariffs in respect of the agreed services at reasonable levels based on the commercial considerations.

v. The designated Airline of each party can enter into cooperative marketing arrangements with the designated carriers of the same party and another party.

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vi. Apart from the above, the ASA also has the provisions relating to Revocation or Suspension of Operating Authorization, Principles governing operations of agreed services, commercial opportunities, safety related clause etc. that were incorporated in the line of Indian model ASA.

vii. The existing Route Schedule annex to the ASA has also been revised and new points of call have been added for enhanced connectivity. Now Indian carriers can operate to any points in Fiji from points in India whereas the carriers of Fiji can establish a direct operation to Delhi, Mumbai and Chennai in India and by code share with Indian carriers to Bangalore, Kolkata, Hyderabad apart from points given for direct operation. Besides this, Kochi, Varanasi, Ahmedabad and Amritsar may be served through domestic code-share operations.

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