Collusion in air? Delhi-Mumbai budget airfare set at Rs5,400

New Delhi: Starting next week, low-fare carriers SpiceJet, IndiGo and GoAir, that fly one in four air passengers in India, have fixed one-way airfares at around Rs5,400 between New Delhi and Mumbai, for the first time seemingly agreeing to common ticket prices on the busiest route in the country after three years of cut-throat price competition with each other.
But, India’s anti-trust regulator, responding to Mint’s queries about the increase, immediately said the common fares—nearly double what was being charged recently—could be a serious violation of the country’s competition rules.
“It seems very odd that they are announcing the same rate at the same time...if it has been done collusively then it is a serious violation of the Competition Act,” said Vinod Dhall, the outgoing acting chairman of the Competition Commission of India. The Commission, he noted, had already warned India’s airlines to refrain from making any collusive increases.
InterGlobe Aviation Pvt. Ltd-run Indigo and SpiceJet Ltd have told travel portals, such as MakeMytrip.com, that the base fare for New Delhi and Mumbai is being fixed at a minimum of Rs2,000, nearly double from earlier. That rate is topped off by levies related to oil prices and increased fuel use while flying over congested airports, and an airport use tax of Rs225 on each ticket.
While ticket prices change often, what makes this hike different is that the three airlines have all set the same airfares in the weeks through August, unlike the typical practice when such tickets start selling cheaply with prices rising closer to the travel dates.
21/06/08 Tarun Shukla/Livemint

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Categories: Low Cost General Jun 2008