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The Fault In Our Algos? CCI Initiates Probe Into Ticket Booking Software Suspecting Price Fixing By Airlines
The picture featuring planes of various airlines parked at the IGI airport on July 25, 2013 in New Delhi, India. (Photo by Ramesh Pathania/Mint via Getty Images)
The Competition Commission of India (CCI) has started an enquiry into airline ticket pricing suspecting price fixing, reports Economic Times.
The Commission noticed similar patterns of pricing of tickets which may be due to anti-competitive processes.
A senior official of CCI has been quoted by ET as saying, “ We found that the pattern of pricing of tickets by all airlines were similar. This raises questions on whether pricing is competitive or airlines are following a similar pattern. We are looking into pricing by all airlines.”
The enquiry comes at a time when airlines are struggling to generate revenue due to excessive competition in the industry. Most of them are making losses unable to meet even their operational costs. The airlines have also complained that IndiGo, the largest player has been increasing its capacity on different routes, thus further squeezing the possibility of raising fares.
The airlines currently use the bucket system for ticket pricing in which the fares increase as the date of travel approaches. Airlines argue that this is a software-based process that takes into account historical booking patterns.
Experts allege that software algorithms can also be rigged to to comply with anti-competitive practices and therefore, a thorough investigation of the algorithm is also necessary.
“Specifically in relation to the airline Industry, it is important to also understand the way algorithms are designed since the programmes are ultimately written or taught by humans in order to derive the best outcome for their employer, which may not always be the best outcome for the market,” said Avimukt Dar, Partner, IndusLaw, a law firm.
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