Three Indian airlines fined over fixing fuel surcharge

The Competition Commission of India (CCI) has slapped three airlines with penalties for “concerted action” in fixing fuel surcharge (FSC) on cargo transport.

The final order was passed by CCI on 7 March on information filed by Express Industry Council of India against Jet Airways, InterGlobe Aviation, and SpiceJet.

The CCI noted in its order the “airlines acted in a concerted manner in fixing and revising the FSC rates and thereby contravened the provisions of Section 3 of the Act which prohibits anti-competitive agreements including cartels”.

Penalties of Rs. 39.81 crore ($6.1 million), Rs. 9.45 crore and Rs. 5.10 crore were imposed upon Jet Airways, InterGlobe Aviation and SpiceJet respectively.

A cease and desist order was also issued against the airlines by the CCI and while imposing penalties, the CCI applied the principle of relevant turnover and based the penalties on the revenue generated by the airlines from air cargo transport services only.

The CCI said: “Considering the financial position of airlines at the relevant time and noting that FSC constitutes about 20-30 per cent of cargo revenue, penalty was imposed by the CCI at three per cent of their average relevant turnover of the last three financial years.”

The CCI deprecated the airlines for using FSC as a pricing tool which was essentially introduced to mitigate the fuel price volatility.