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Regulatory Scrutiny Intensifies as India's Largest Airline Faces Market Dominance Allegations.
India's Competition Commission (CCI) is conducting an in-depth investigation into India's largest domestic airline, IndiGo, for a range of reasons, including significant flight cancellations disrupting air travel at a peak time for travel. IndiGo is thought to have 65% of the domestic airline market share and now faces serious allegations of unfair business practices. In December, millions of holiday travellers experienced flight cancellations, with approximately 93% caused by IndiGo. Because of its operational challenges, the Directorate General of Civil Aviation (DGCA) reduced IndiGo's winter flight schedule by 10% through February.
The CCI's 16-page order indicates that IndiGo's canceled flights created an artificial scarcity of flight capacity in the marketplace and potentially violate competition laws. Additionally, the CCI believes that IndiGo's actions may reach the threshold of Section 4 of the Competition Act of India, which governs the regulation of dominant companies and service restrictions. Financially, the airlines paid approximately ₹24.27 crore in compensation to customers for the flight cancellations with IndiGo covering approximately ₹22.74 crore of that amount due to passenger support. In addition, the DGCA previously levied a fine of ₹22.20 crore on the airline and provided warnings to several of IndiGo's senior executives.
There have been minor changes in market landscape since last month. Air India Group has reached 29.6% market share from approximately 29.0% at the end of November and Akasa Air increased its share to 5.2% up from 4.9% last month. Spice Jet had a minor increase in its market share as well at 4.3%, up from 4.2%. This investigation into IndiGo's conduct is taking place at an important juncture for the aviation industry in India as the CCI is reviewing how both IndiGo's position in the industry and its operational decisions have affected consumers and competition. The CCI has instructed the Director General to conduct an in-depth review of these issues, as there are serious concerns about the airline's market behavior.
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