Tuesday, October 30, 2018

Rivals accuse IndiGo of using its strength to squeeze them out

New Delhi: Tripura chief minister Biplab Kumar Deb wrote to the aviation ministry last week, urging it to intervene in what he characterised as an airline exploiting a monopolistic situation on the Agartala-Kolkata route after a rival was forced to stop flights. Fares had surged 150% as a result.
The airline he blamed for pushing SpiceJet out was IndiGo. The airline is using its fleet size and financial might to squeeze everyone else out of the market, its rivals allege. IndiGo has denied the accusations, saying that increasing capacity is part of its strategy to remain competitive. This is happening as India’s airline industry is struggling like never before with rising fuel prices and a weak rupee. Jet Airways is shopping around for a rescuer and state-owned Air India continues to hang on thanks to the forced generosity of taxpayers.
While Deb’s indignation may be specific to Tripura, all airlines are worried. They complain about IndiGo misusing its dominant position by launching flights flanking those of the competition, thus lowering yields and forcing them to discontinue or reduce their own flights on these routes.
“The withdrawal of flights by SpiceJet created a monopolistic situation for IndiGo Airlines, resulting in a sharp increase in airfares,” Deb said in his letter to aviation minister Suresh Prabhu, which ET has seen. “The airfare from Agartala to Kolkata has already shot up from Rs 2,000 to Rs 5,000. We get an impression that IndiGo Airlines is now trying to exploit this situation by withdrawing more flights, which will result in a further increase in airfares to their benefit. This, in our view, certainly calls for intervention from the ministry of civil aviation.”
IndiGo said it would continue to add flights to Agartala as and when demand increases.
30/10/18 Mihir Mishra/Economic Times

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