Competition Commission Investigates IndiGo for Unfair Business Practices Following Flight Cancellations

The Competition Commission of India (CCI) has initiated a detailed investigation into IndiGo for alleged unfair business practices. This follows the airline's cancellation of numerous flights due to operational issues, causing significant inconvenience to passengers. The CCI's preliminary findings suggest that IndiGo may have abused its dominant market position by creating an artificial scarcity of flights during peak demand periods.

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In December, IndiGo experienced major operational disruptions, leading to the cancellation of 2,507 flights and delays in 1,852 others over three days. This affected over 300,000 passengers nationwide. Consequently, the Directorate General of Civil Aviation (DGCA) reduced IndiGo's winter schedule by 10% until February 10. The airline's market share, which had been above 63%, dropped to 59.6% in December.

IndiGo's Market Dominance Under Scrutiny

IndiGo holds a substantial share of the domestic air passenger market, controlling around 60-61% of Available Seat Kilometres (ASKM). This dominance is reflected in its extensive network reach and large fleet size. The CCI noted that such a position allows IndiGo to operate with minimal competitive pressure, as effective rivals are significantly constrained.

The CCI's order highlighted that IndiGo's actions might limit consumer access to air travel during high-demand periods. By cancelling a significant portion of its scheduled capacity, IndiGo effectively withheld services from the market. This conduct could be seen as restricting service provision under Section 4(2)(b)(i) of the Competition Act, which addresses abuse of dominant position.

Legal and Regulatory Considerations

IndiGo challenged the CCI's jurisdiction over this matter, but the regulator cited a Supreme Court ruling affirming its authority. The ruling clarified that while TRAI can identify anti-competitive activities, only the CCI can address them under the Competition Act. The CCI emphasized its role in examining potential violations and their consequences under this legislation.

The DGCA provided responses to the CCI's inquiry but clarified its limitations in competition law analysis. While it oversees licensing and safety regulations, it does not assess market dominance or anti-competitive behaviour. The CCI remains responsible for evaluating these aspects within the aviation sector.

The investigation stems from a passenger complaint regarding flight cancellations in early December. The CCI identified the domestic air passenger transport services market as relevant for assessing this issue. It concluded that IndiGo's conduct could adversely affect competition in India, warranting further examination by its Director General.

IndiGo's objections were dismissed by the CCI, which referenced a Supreme Court decision supporting its jurisdiction. "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," stated part of the ruling included in the order.

The ongoing investigation will delve deeper into IndiGo's practices and their impact on competition. The outcome could have significant implications for India's aviation industry and regulatory landscape.

With inputs from PTI