Suspension of flights by crisis-hit Kingfisher Airlines may be a possible reason for soaring airfares, though there is no evidence yet of price cartelisation among carriers, fair trade regulator Competition Commission of India (CCI) has said.
“If there was indeed a cartel, which is formed to make disproportionately high profits, the airlines would not have been making losses. But, the fact is none of them is making profits, so you cannot have a cartel,” said CCI chairman Ashok Chawla in an interview.
Noting that the “sensitive” matter of carriers forming a possible cartel to push up airfares has been probed by CCI more than once in the past, Chawla said that he is open to looking into the matter again if there is something to show anti-competitive practices.
“I don’t want to prejudge, and, if there is something, we will look into it. At the moment, there does not seem to be anything (related to cartelisation),” he said.
Explaining the findings of CCI probes in this regard, Chawla said that the fares had gone down a few years ago when “supply was substantial and demand was picking up”.
“After that when supply did not increase — in fact supply went down because of one airline slowly reached the stage of where it is non-functional — the demand did not go down to that extent,” he said, on a query whether suspension of flights by Kingfisher has impacted prices.
“So, as there was a symmetry between demand-supply that then (a few years ago) led to lowering of prices, the asymmetry between demand and supply now is putting an upward pressure on the fares,” Chawla said.