Capping of airfares violates competition norms: Ashok Chawla, CCI chairman

NEW DELHI: Capping of airfares will violate competition norms as it stifles the movement of market forces, fair trade watchdog CCI's chief Ashok Chawla has said amid rising calls to curb exorbitant pricing of air tickets.

Terming that such a move would be "antithetical" to the philosophy of competition as well as deregulation, Chawla stressed that market forces should be allowed to operate.

His assertion comes against the backdrop of increasing demand from various quarters, including Parliamentarians, to put in a mechanism to contain steep fluctuations in airfares.

The Competition Commission of India (CCI) Chairman said capping of airfares has no place on the competition side and the prices have to be determined by the market forces as the sector is deregulated.

"Capping (of airfare) is antithetical to the policy of deregulation as well as to the whole philosophy of competition and what market determines," Chawla told PTI in an interview.

He observed that when something is deregulated and the market forces are supposed to determine it, then capping of pricing is not in sync with the philosophy of deregulation.

"So deregulation is where you allow market forces to operate and if you allow market forces to operate and you sought of stifle the market forces saying you will not allow this beyond a level, then actually you are not allowing the full play of market forces," the CCI chief said.

Currently, the CCI is probing whether there is cartelisation among carriers in fixing price of air tickets. Interestingly, the watchdog had looked into the matter on three previous occasions as well but did not find any evidence of fair trade norm violations.

About the ongoing investigation, Chawla said it would take a couple of months.

In May, a group of Parliamentarians led by by BJP leader Kirit Somaiya, had met Chawla and lodged a fresh complaint against carriers on airfares.

While there has been no official word from the government on capping of airfares, Union Minister Mahesh Sharma has hinted in recent times that ways were being looked at to curb predatory pricing of air tickets.

"Even if we talk (about the issue) in Parliament, out of the 543 Parliamentarians, I am sure at least 500 would say that there should be a capping," Sharma, who is the Minister of State for Civil Aviation, had said last month.

However, the Ministry has also been emphasising that airfares are not regulated by the government as they are determined by the interplay of market forces.