IndiGo and SpiceJet shares staged a dramatic rebound on Wednesday, while Jet Airways traded off the day’s lows. The three carriers had earlier slumped between 2-4 per cent on the Competition Commission of India’s (CCI) decision to impose a combined penalty of Rs 258 crore for collusion to fix fuel surcharge on air cargo.
Here are the latest developments:
1) Budget carriers SpiceJet surged over 5 per cent, while newly listed InterGlobe Aviation, which runs IndiGo, traded 2 per cent higher. Jet Airways shares, which slumped over 4 per cent in early trade, were down just 1.5 per cent.
2) Shares in the three carriers had opened with deep cuts following the fair trade regulator’s Tuesday decision to penalize them for colluding to fix fuel surcharge (FSC) rate, which was introduced to mitigate fuel price volatility.
3) The three carriers were directed by the CCI to cease and desist from indulging in anti-competitive practices.
4) The CCI asked the three carriers to pay 1 per cent of their average turnover of the last three financial years as penalty for cartelization.
5) Accordingly, Jet Airways was asked to pay a fine of Rs 152 crore, IndiGo Rs 64 crore and SpiceJet Rs 42.5 crore within 60 days.
6) Both Jet Airways and InterGlobe Aviation contested CCI’s charges in a statement to the Bombay Stock Exchange. The two carriers said they will challenge the penalty. A statement from SpiceJet is awaited.
7) The investigation was initiated against five airlines on the basis of information provided by Express Industry Council of India alleging collusion in levy of fuel surcharge on transport of cargo.
8) The fair trade regulator did not impose any penalty on national carrier Air India and private carrier Go Airlines. Go Airlines gave its cargo belly space to third party vendors with no control on any part of commercial/economic aspects of cargo operations done by vendors including imposition of FSC, CCI said.
9) According to CCI, anti-competitive ways in the air cargo industry undermines economic development of the country and ultimately acts to the detriment of end-consumers.
10) Aviation stocks have gained sharply in the run up to the listing of InterGlobe Aviation. Most carriers have started reporting profits recently, aided by a crash in crude oil prices and domestic economic recovery.