Air India is headed for fresh trouble. The US government?s anti-trust department has served a notice to the state-owned airline for adopting ?unfair trade practices? in its cargo business. The cost of settling the case ? either out of court or through litigation ? could turn out to be a big drain on the meagre finances of the airline.
The airline?s chairman and managing director Arvind Jadhav has written to the civil aviation ministry to take up the issue with the US authorities on diplomatic levels. A government official said the aviation ministry would have to move the external affairs ministry to help resolve the issue.
In a similar case last September, China Airlines had paid a $40-million penalty to settle charges that it had engaged in a conspiracy to fix cargo rates charged to customers for international air cargo shipments to and from the US. This has put Air India on a sticky wicket, forcing Jadhav to take up the issue with the parent ministry.
Since the flag carrier is surviving on a financial lifeline from the government, any expenses related to the case will have to be considered by the civil aviation ministry.
Air India sources said the case is several years old and involves allegations of an airlines? cartel which set cargo charges like handling, delivery and fuel surcharge at identical rates. ?The case involves Air India before its merger with erstwhile Indian Airlines,? an official of the company said.
A notice on the website of the US anti-trust department says as a result of this investigation, a total of 18 airlines and eight executives have been charged ?in the Justice Department’s ongoing investigation into price fixing in the air transportation industry.?
Industry sources said that it was general practice in the past to determine parts of the consolidated freight charges along with other airlines and it was not considered unfair trade practice. When contacted, an Air India spokesperson said that the airline was never involved in any cartelisation activity.
He said the company had a very minuscule cargo operation with the total volume not even constituting 2-3% of the entire quantum they (the US anti-trust department) are talking about. ?We are not at all involved,? he said. Kapil Kaul, head of Centre for Asia Pacific Aviation (CAPA) said the airline would have to present its case essentially arguing there was no violation of competitive practices.