New Delhi: Like its counterpart in telecommunications, the civil aviation ministry has a delicate role to play in fostering healthy competition in a licensed industry. But even within that almost contradictory paradigm, it is difficult to understand the rationale for the ministry's plans to regulate airfares and refer possible irregularities to the Competition Commission of India (CCI).
The argument may appear unexceptionable, since airlines do occasionally indulge in collusive abuse of their dominance. But two issues flow from this. First, are these practices, even if they are proven, so rampant as to amount to wholesale cheating? Second, does the ministry really have the wherewithal to track down and examine such practices?
To consider the first point, one compelling indicator of collusion and overcharging would be super-profits earned by airlines. This is nowhere in evidence. According to a CAPA outlook on Indian aviation, the seven Indian domestic airlines (Jet Airways and JetKonnect are considered separately) lost about $1.65 billion (about Rs 9,900 crore at the current exchange rate) in 2012-13. Critically, about 40 per cent of this loss was generated in the last quarter of the year, according to the study, owing to "aggressive discounting during the traditionally weak period between January and March".
24/07/13 Business Standard
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The argument may appear unexceptionable, since airlines do occasionally indulge in collusive abuse of their dominance. But two issues flow from this. First, are these practices, even if they are proven, so rampant as to amount to wholesale cheating? Second, does the ministry really have the wherewithal to track down and examine such practices?
To consider the first point, one compelling indicator of collusion and overcharging would be super-profits earned by airlines. This is nowhere in evidence. According to a CAPA outlook on Indian aviation, the seven Indian domestic airlines (Jet Airways and JetKonnect are considered separately) lost about $1.65 billion (about Rs 9,900 crore at the current exchange rate) in 2012-13. Critically, about 40 per cent of this loss was generated in the last quarter of the year, according to the study, owing to "aggressive discounting during the traditionally weak period between January and March".
24/07/13 Business Standard
