CCI orders detailed probe against IndiGo for unfair business practices

The Competition Commission on Wednesday ordered a detailed probe against IndiGo for unfair business practices, nearly two months after the country’s largest airline cancelled thousands of flights due to operational issues, causing hardships to passengers. After taking into consideration data related to airlines and those provided by the aviation regulator DGCA, the Competition Commission of India (CCI) has prima facie concluded that IndiGo has abused its dominant position.

In a 16-page order, CCI said that by cancelling thousands of flights, which constituted a significant portion of the scheduled capacity, IndiGo effectively withheld its services from the market, creating an artificial scarcity, limiting consumer access to air travel during peak demand.

“Such conduct by a dominant enterprise may be viewed as restricting the provision of services under Section 4 (2) (b)(i) of the Act,” the regulator said.

Section 4 of the Competition Act pertains to abuse of dominant position.

For assessing the complaint filed by a passenger who was impacted by the cancellation of flights in early December, the watchdog considered the ‘market for domestic air passenger transport services in India’ as the relevant one. Noting that prima facie the airline’s conduct seems to be causing an appreciable adverse effect on competition in India, CCI ordered a detailed investigation by its Director General (DG).

“IndiGo consistently accounts for approximately 60-61 per cent of total domestic ASKM (Available Seat Kilometres), which reflects not only passenger volumes but effective control over market capacity and supply-side conditions.

“The domestic passenger aviation market exhibits very high and increasing concentration, exhibiting that leading firms possess the ability to operate independently of competitive forces, as the presence of effective rivals is materially constrained,” the regulator said.

On the basis of substantial and sustained market share, wide network reach with exclusive operations on a significant number of city-pair routes, comparatively larger fleet and strong financial performance, the watchdog said it was of the prima facie view that IndiGo enjoys a position of dominance in the relevant market delineated supra.

CCI also rejected the objections raised by IndiGo that the regulator does not have the jurisdiction to look into the case and cited a Supreme Court ruling.

“Even if Trai also returns a finding that a particular activity was anti-competitive, its powers would be limited to the action that can be taken under the TRAI Act alone. It is only CCI, which is empowered to deal with the same anti-competitive act from the lens of the Competition Act.

If such activities offend the provisions of the Competition Act as well, the consequences under that Act would also follow...” CCI cited a part of the ruling in its order. Further, CCI, in the order, mentioned the responses given by the Directorate General of Civil Aviation (DGCA).