The Competition Commission of India (CCI) on Wednesday rejected a complaint against IndiGo and Air India for allegedly abusing its market dominance to impose unfair cancellation charges on air tickets.
The complainant told the CCI that both IndiGo and Air India control over 90% share in the domestic aviation market, and by acting individually and in concert, the airlines have been maintaining “unconscionable and illegal rates of cancellation charges.”
Transparent Refund Mechanisms
In its order, the commission said that both IndiGo and Air India have systems that allow customers to get substantial refunds if they opt for refundable tickets. “A passenger has options to select a fare that will give him the maximum or full refund depending on the airline and type of air fare selected, time of cancellation of the ticket, amongst other factors. The refund and cancellation terms are disclosed to passengers in advance. These are applied equally to all consumers and not in a discriminatory, unfair or exclusionary manner,” the order said.
Legal Limitations
The CCI also said that the concept of collective dominance is beyond the purview of the Competition Act. “The commission also notes that the remedy of the informant for alleged breach of the Indian Contract Act, 1872 in the present matter does not lie before the commission. Further, dissatisfaction with a contractual term or desire for more favourable terms and conditions does not constitute a violation of the Act,” the regulator noted.
At the time of filing the complaint, it was argued that if a passenger cancels a ticket and thereby breaks the contract, the airline is at best entitled to a “reasonable compensation”. This reasonable compensation must represent a genuine estimate of loss suffered as a result of the breach. The complainant claimed that the cancellation does not put the airline in any position worse than it was in prior to the booking, and the question of loss would arise only if, as a direct result of the cancellation, the airline is prevented from selling that ticket to another potential passenger.
It was also alleged in the complaint that usurping and retaining the lion’s share of the fare as cancellation charges when the airline has not incurred any loss on account of the cancellation, constitutes illegal enrichment, which is made possible by the dominant position these airlines hold.