Kingfisher-Jet Collaboration ends Liberalisation with Cartelisation

The Kingfisher-Jet Air deal is cruel reminder how corporates can masquerade collaboration for cartelisation. Though there is nothing wrong in the cost rationalization objective of the deal. But, as pointed out by the two owners of the airlines that the deal will directed towards route rationalization. In other words two airlines will effectively kill competition on smaller routes, where only either of the airlines will fly at certain point of time. This will reduce the option available to the customers and will eventually kill the price difference available to customers.

The new alliance will have the quasi power in deciding the ticket pricing. The impact will be on airline service cost for ‘B & C class’ cities, where fare may rise more steeply than those in four metros. The fare reduction mantra which both these companies is mere public posturing in the current environment and is more aimed at diverting attention from negative response on some of the deal aspects. These heavily loss incurring airlines wouldn’t reduce fares, if they had to, they would have done it when government had announced tariff reduction on ATF.