With the chips being down for Kingfisher Airlines and Air
India that has led to crunch of seats availability for meeting the demand of
air travel in domestic and international sectors, the prices of the other
operating carriers have been rising steeply. The rise is particularly steep as
compared with the similar prices last year and even after discounting the
factor of fuel price rise.
The office of Director General Civil Aviation (DGCA) had
issued advisories in past for airlines to keep prices within reasonable and
rationale limits. The pundits of economics refuse to see anything fishy about
this price rise and argue that due to the market conditions of more demand and
less supply, it was natural for airlines to increase the prices of air ticket booking. However, the
Ministry of Corporate Affairs sees it differently and has suspected formation
of cartel by the airlines for increasing the prices under the usual alibi of
market conditions. Thus, it has asked the Competition Commission of India (CCI)
to investigate into price increase.
The main reason of suspicion is the coordinated price rise
of otherwise cheap flight tickets by
all airlines in last couple of months which give hints of cartel formation. The
air fares have soared to about 50 percent on many routes in the past two months
and this has been done by all the airlines. While the law draws distinction
between the coordinated price rise and cartelization, both of these activities
are prohibited under the law since these are unhealthy for competitive market
conditions. Formation of cartel for increasing prices is done deliberately as a
well considered measure to ward-off competition since there is a mutual
collusion among the players. However, this puts customers at a disadvantage
since instead of getting competitive cheap
flight tickets, they get the rigged prices.
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