Measuring airline competition in India

How does the Competition Commission find out if domestic airlines are competing or colluding? Is it by the number of flights they operate or the fares they charge? After all, if they reduce the number of flights, the effect on costs and prices is the same as if they were to raise fares in collusion with each other. Output reduction may be the standard response to bad times but it is rarely done collusively.
However, whether that can be said for airlines is not altogether clear. India has far too few full-service airlines — and one of the three belongs to the Government.
Also, for some reason best known to the Directorate General of Civil Aviation (DGCA), it is virtually impossible to find out the exact number of flights operated. The Competition Commission should ask for this data to be reported on a regular basis. It is, after all, output data of the kind that every other producer reports.
The domestic aviation industry is planning to operate 10,300 weekly flights this winter. Last year the airlines had filed requests to operate almost 11,000 weekly flights.
In the summer they had reduced domestic weekly departures by around 400 flights, or about 4 per cent. The 10,609 weekly departures from March-end this year were the lowest flown by the industry since 2007 (10,624). This despite the fact that as per the domestic passenger data released by DGCA between January-September this year, domestic airlines carried 373.20 lakh passengers, against 314.85 lakh passengers in the corresponding period last year, registering a growth of 18.5 per cent.
25/10/10 Ashwini Phadnis/Business Line

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Oct 2010