Wednesday, November 18, 2015

Airlines to challenge CCI’s order

THE HINDU,18NOV2015


Stocks of Jet Airways and IndiGo came under selling pressure in the morning but the stock prices recovered during the day after investors started discounting the impact of the penalties.

Jet Airways, IndiGo and SpiceJet, the three airlinesthat have been penalised by the Competition Commission of India (CCI) on charges of colluding to fix Fuel Surcharge (FSC) on air cargo, have decided to legally challenge the order.
“The company is studying the CCI order and will take legal steps to challenge the above order in the appropriate forum.
“The company has been legally advised that it is not in contravention of the provisions of the Competition Act, 2002,” InterGlobe Aviation Ltd, which owns and operates IndiGo said.
InterGlobe Aviation Ltd has been asked to be pay penalty of Rs.63.74 crore.
Jet Airways, which has been imposed with a penalty of Rs.151.69 crore, said that the investigation was initiated against five airlines on the basis of information provided by Express Industry Council of India (EICI) alleging collusion in levy of fuel surcharge on transport of cargo.
“While the investigation carried out by the Joint Director General, CCI, concluded that the allegations levelled against the airlines were not proved, the Commission, pursuant to the objections filed by EICI, has held otherwise and imposed a penalty on the company and two other airlines,” Jet Airways said in a filing with the stock exchanges.
“Jet Airways believes that it is not in contravention of the provisions of the Competition Act and it shall pursue all available legal steps to defend its position,” the airline said.
Similarly, SpiceJet said it did not indulge in anti-competitive activities, as found in the investigation of the CCI which has imposed a penalty of Rs.42.48 crore on the Ajay Singh led airline.
“The company is examining the order and shall be taking such steps, including challenging the order in appropriate forum as may be advised and deemed necessary to defend the company’s position,” SpiceJet said.
Since these airline companies are listed on stock exchanges, the stocks of Jet Airways and IndiGo came under selling pressure in the morning but the stock prices recovered during the day after investors started discounting the impact of the penalties.
Jet Airways stock closed with a loss of 3 per cent at Rs.416, InterGlobe Aviation (IndiGo) closed with a gain of 0.90 per cent at Rs.1,044.40 and SpiceJet closed at Rs.52.55, a gain of 9.48 per cent, after touching 52 weeks high of Rs.54.40 in intraday on news that the airline would place order for 150 planes to increase its fleet size.
Interestingly, Air India was spared as its conduct was not found to be parallel with other airlines and Go Air were let off as it gave its cargo belly space to third party vendors with no control on the cargo operations.

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