Shares of Interglobe Aviation Ltd slipped 2% on 5 February after the Competition Commission ordered a detailed investigation into IndiGo’s unfair business practices, nearly two months after the country’s largest airline cancelled thousands of flights due to operational issues, causing hardships for passengers.

After considering airline data and information submitted by the aviation regulator DGCA, the Competition Commission of India (CCI) has decided that IndiGo has misused its dominant position.

In a 16-page ruling, CCI stated that by cancelling thousands of flights, which formed a considerable portion of the scheduled capacity, IndiGo effectively withdrew its services from the market, creating artificial scarcity and limiting consumer access to air travel during peak demand.

“Such conduct by a dominant enterprise may be viewed as restricting the provision of services under Section 4 (2) (b)(i) of the Act,” the regulator said. Section 4 of the Competition Act addresses abuse of dominant position.

The watchdog regarded the market for domestic air passenger transport services in India’ to be relevant when examining a complaint lodged by a passenger who was affected by flight cancellations in early December.

IndiGo’s shares declined 9.2% in January, following a 14.3% decline in December.

Noting that the airline’s conduct appears to be having a significant negative impact on competition in India, the CCI requested a thorough inquiry by its Director General (DG).

“IndiGo consistently accounts for approximately 60–61%of total domestic ASKM (Available Seat Kilometres), which reflects not only passenger volumes but effective control over market capacity and supply-side conditions.

“The domestic passenger aviation market exhibits very high and increasing concentration, exhibiting that leading firms possess the ability to operate independently of competitive forces, as the presence of effective rivals is materially constrained,” the regulator said.

Based on substantial and sustained market share, broad network reach with exclusive operations on a significant number of city-pair routes, a comparatively larger fleet, and strong financial performance, the watchdog concluded that IndiGo has a dominant position in the relevant market delineated above.

CCI also dismissed IndiGo’s claims that the agency lacks jurisdiction over the matter, citing a Supreme Court order.

“Even if Trai also returns a finding that a particular activity was anti-competitive, its powers would be limited to the action that can be taken under the TRAI Act alone. It is only CCI, which is empowered to deal with the same anti-competitive Act from the lens of the Competition Act. If such activities offend the provisions of the Competition Act as well, the consequences under that Act would also follow…” CCI cited a part of the ruling in its order.

Furthermore, in the order, CCI cited the responses provided by the Directorate General of Civil Aviation (DGCA).

“While DGCA discharges sector-specific regulatory functions, such as licensing, safety oversight and operational supervision, it does not undertake competition law analysis, including delineation of the relevant market, assessment of dominance and its alleged abuse, examination of coordinated conduct or evaluation of appreciable adverse effect on competition,” the order said.

In early December, IndiGo had severe operational problems, prompting the Directorate General of Civil Aviation (DGCA) to reduce the airline’s winter schedule by 10% till 10 February.

Between December 3 and 5, 2,507 flights were cancelled and 1,852 flights were delayed, affecting nearly 3 lakh passengers at airports across the country, according to the regulator in a statement issued on 20 January.

IndiGo, which had been controlling more than 63% of the domestic air traffic market for several months, saw its share fall to 59.6% in December.

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