A Critical Overview Of The Aviation Sector In Light Of The Recent Amendments In Indian Competition Law

Author: LawSphereX

Category: Competition Law

Published: 2026-08-23T17:12:24.48173+00:00

Updated: 2026-08-30T07:09:14.031Z

A CRITICAL OVERVIEW OF THE AVIATION SECTOR IN

LIGHT OF THE RECENT AMENDMENTS IN INDIAN COMPETITION LAW Antara Mandal, Christ University, Delhi NCR Jasleen Pasricha, Christ University, Delhi NCR

ABSTRACT

The Competition (Amendment) Act, of 20231 aims to strengthen competition regulation and ensure a fair market. With the emerging entrepreneurship programmes and the country's booming economy, the amendment ensures that there is an amicable environment that would ultimately help businesses to grow and ensure the economy's betterment by maintaining a fair competitive market. The Indian market is observed to be price-sensitive and has a unique trend that is not observed in other countries. Sectors like IT, Agriculture, Automobile, Aviation and many such industries are growing impeccably. India has emerged to be the third-largest domestic aviation market in the world. It has been estimated that the industry will overtake the UK and become the third-largest air passenger market by 2024. The aviation industry is a major job creator and alone facilitates the tourism market in millions.

The sector shares almost US$30 billion i. e. , 5% of Indian GDP. With such a huge market share, the sector has a number of good market players. Hence, it requires specific regulations and surveillance to ensure the market competition is fair and just. This research paper dives into the competitive extremes, lacunae and challenges in the Aviation sector and briefs an analysis of the oligopolistic aviation market in light of the Competition Act of 20022 and recent amendments. In conclusion, the paper delves into economic-legal analysis and recommendations that ensure the consumer’s interests are safeguarded and the competition is maintained. Keywords: Competition Act, 2002, Anti-Trust, Aviation, Monopoly, Market 1The Competition (Amendment) Act, No. 9 of 2023, Acts of Parliament, 2023 (India).

2 The Competition Act, No. 12 of 2003, Acts of Parliament, 2002 (India).

1. Introduction

Anti- Anti-trust laws aim primarily to promote Competition among the market players and limit the chances of Monopoly or domination of single players. These antitrust market players and their acts lead to less competition, fewer choices for consumers, higher prices, lower quality, and less innovation. In the US, such regulations are called anti-trust laws and in India, these are called competition laws as governed under the Competition Act, 20023. These forbids Anticompetitive conduct and mergers. It is the medium to protect the interests of American Taxpayers and consumers. The Clayton Act4, the Federal Trade Commission Act of

19145 and the Sherman Act. The Clayton Act prohibits mergers in the market that reduce

Competition and promote anti-trust. The Sherman Act 6Deals which forbids antitrust agreements unreasonable foreign commerce (price fixing agreements) and unfair trade practices. It analyzes all vertical agreements under the Rule of Reason. This Act rejects Deals, predatory pricing, tying arrangements, and exclusive dealing. Robinson-Patman Act of 1936 amended the Clayton Act7 which now bans certain discriminatory prices, services, and allowances in dealings between merchants. Clayton Act was also amended by the Hart-Scott- Rodino Antitrust Improvements Act 19768. It sorts the companies planning large mergers or acquisitions to notify the government of their plans in advance. The Federal Trade Commission Act9 was passed by the congress in 1914. It disallowed unfair competition methods and other deceptive acts. In Brooke Group Ltd. V.

Brown & Williamson Tobacco10, the two-part test was also introduced. the Federal Trade Commission, sometimes with the U. S. Department of Justice, enforces the federal antitrust laws. It limits the practices that promote anti-trust market activities and decrease market competition. The nodal Ministry responsible for governing and forming the aviation sector in India is the Ministry of Civil Aviation (MoCA) under the government of India. This industry is regulated under The Aircraft Act, of 193411 and the Aircraft Rules, of 1937. These statutes regulate the

3 The Competition (Amendment) Act, No. 9 of 2023, Acts of Parliament, 2023 (India).

4 Clayton Antitrust Act of 1914, 15 U.S.C. §§ 12–27.

5 Federal Trade Commission Act of 1914, 15 U.S.C. §§ 41–58.

6 The Sherman Antitrust Act of 1890, Act no. 26 Stat. 209, Acts of U.S.C.

7 The Competition (Amendment) Act, No. 9 of 2023, Acts of Parliament, 2023 (India).

8 Hart–Scott–Rodino Antitrust Improvements Act of 1976, Pub. L. No. 94-435, 90 Stat. 1383 (1976).

9 Federal Trade Commission Act, ch. 311, 38 Stat. 717 (1914).

10 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993)

11 The Aircraft Act, No. 22 of 1934, Acts of the Legislature of India, 1934 (India).

manufacturing, possession, sale, use, operation, export and import of aircraft. These monitor the airworthiness, aircraft maintenance, general conditions of flying and safety, registration of aircraft and conduct of investigations. The Aircraft (Security) Rules, 201112 gives the safety and security regulations for aerodromes and aircraft in India. Carriage by Air Act, 1972 gives rights and liabilities to carriers, passengers, consignors. The regulatory authorities under this ministry are the Directorate General of Civil Aviation (“DGCA”) gives the prerequisites of stakeholders before the issuance of a licence, certificate, approval or permission. The Airports Authority of India(AAI) was set up under The Airports Authority Act in 1994. It is responsible for the development, finance, operation and maintenance of all government airports in India.

2. Competition Laws in the Aviation Industry

The civil aviation in India started in December 1912. The first domestic air route was between Karachi and Delhi. The aviation industry in India facilitates economic growth, world trade, international investment and tourism and other resultants of globalization. As the economies of developing countries grow, their own citizens are already becoming the new international tourists of the future. The more the demand for the air services, the more the supply. The market players aiming at high profit joined the regime of the Airline Industry. Thus, increased competition. The Competition Act, 2002 was passed by the Parliament 2002, gaining the President’s assent in January 2003. It was subsequently amended by the Competition (Amendment) Act, 2007.

Competition Act 2022 aims to establish a Commission to prevent practices having adverse effects on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets in India and related matters. The Competition Act 2002 replaced the Monopolies Restrictive Trade Practices Act, 1969(MRTP Act)13. Thus the Competition Commission of India (CCI) prevails instead of the MRTP Commission. In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established. The Competition Commission of India is now fully functional with a Chairperson and six members. The provisions of the Competition Act relating to anti- 12 Aircraft (Security) Rules, 2011, Gazette of India, pt. II, sec.

3(i), Ministry of Civil Aviation, Govt. of India. 13 The Monopolies and Restrictive Trade Practices Act, No. 54 of 1969, Acts of Parliament, 1969 (India). competitive agreements and abuse of dominant position were notified on May 20, 2009. Rule 135 Aircraft Rules 1937 14– it makes provisions for the prohibition of oligopolistic or anticompetitive practices for aviation. It states that Every air transport undertaking operating shall establish a tariff having regard to all relevant factors, including the cost of operation, characteristics of service, reasonable profit and the generally prevailing tariff. Every air transport undertaking shall cause to be published the tariff established by him and shall display such tariff in a conspicuous part of his office and in the office of his agent.

The Indian Government has taken several steps to combat the issues in the aviation sector and for its growth. These include schemes like Ude Desh Ka Aam Nagrik (UDAN)15, National Civil Aviation Policy 201616 etc.

3. Major Loopholes

The aviation sector shows up as a more oligopolistic form of market. It gives rise to two forms of competition as suited to the situations according to the circumstances. Here, when there is positive competition among the market players. It results in fierce competition with a reduced chance of monopoly leading to decreased prices of airline tickets and more utility and benefit to consumers. On the contrary, the negative competition gives rise to RTP by means of collusion to the airlines forming cartels to inflate prices and exploit consumers. Price competition ensures an efficient supply of output/services by companies. Companies are free to change/raise their prices taking into consideration the foreseeable conduct of their competitors.

Code Sharing Agreement is a bilateral Air Service Agreement (ASA) between two countries where a marketing airline places its designator code on a flight operated by an operating airline and then markets and sells tickets for that flight. It enables airlines to increase their traffic and revenues, profits, network size, and service frequency, offering more destinations through the coordination of operations. The guidelines on such code-sharing agreements is given under India's National Civil Aviation Policy, 2016 ("NCAP") released by the Ministry of Civil 14 Aircraft Rules, 1937, r. 135, Gazette of India, pt. II, sec. 3(i), Ministry of Civil Aviation, Govt. of India.

15 UDAN Scheme (Ude Desh Ka Aam Nagrik) – INSIGHTSIAS, INSIGHTSONINDIA.COM,

https://www.insightsonindia.com/udan-scheme-ude-desh-ka-aam-nagrik/ (last visited Oct. 15, 2023). Ministry of Civil Aviation, National Civil Aviation Policy, 2016, https://www.civilaviation.gov.in/sites/default/files/Final_NCAP_2016_15-06-2016-2_1.pdf (last visited Oct. 15, 2023).

Aviation. It stated that international code-share arrangements with foreign carriers will be liberalized as per the code-share arrangements in ASA. No prior approval from MoCA will be required. The designated carriers of India need to inform 30 days prior before starting the codeshare flights. However, if found that the code-share agreement violates the ASA, the same shall be disallowed, notwithstanding prior intimation given to MoCA. The DGCA allows a more transitional approach to the functioning of the airlines in India rather than a Liberal approach to avoid the malice of code-sharing agreements. Slot allocation refers to setting a particular time for the take-off and landing of the aircraft. Where the demand for slots exceeds the supply, the airport can be capacity-constrained.

The regulation of this process is essential to ensure efficient access to airports’ infrastructure and resources. There are some concerns regarding slot allocation in India and there is an urgency for legislation with a centralized structure. There is seen a week slot allocation in India with less transparency. SLOT allocation and the problem of airlines blocking slots beforehand and not using them. This results in the wastage of resources and gives rise to subsequent charges like landing charges taxi charges etc. The guidelines of SLOT Allocation were last revised in 2013. In 2022 govt started discussions on revising the SLOT Allocation guidelines which were indeed criticised by many airlines as it prima facie might create a favourable market condition for the market leader INDIGO airlines.

The cap of 80 % of slots allotted must be used and if wasted airlines would not be granted the slot creating a fuss.

4. Major case laws that have impacted AAEC in India, Cartel formation

With the transition from a poor and under-developed country and decades of being called a developing country with a maximum population belonging to the Below Poverty Line (BPL), India has managed to be the 5th largest economy by nominal GDP and the 3rd largest by purchasing power parity (PPP). World Bank’s half-yearly report on the Indian Economy, stated that with a disturbed global economy and adverse global challenges, India has managed to maintain a stable economy and is the fastest-growing economy with 7. 2% for the present financial year. It ranks second in growth rate among the G20 countries. 17 But this global 17 World Bank, India’s Growth to Remain Resilient Despite Global Challenges, WORLD BANK (Oct. 4, 2023, 12:16 PM), https://www. worldbank. org/en/news/press-release/2023/10/03/india-s-growth-to-remain-resilientdespite-global-challenges.

recognition and better economy weren’t achieved in one go, India underwent many economic experiments and transitioned from the type of market i. e. , from mixed plan economy to mixed middle-income developing social market economy. In this contemporary world arena, aviation has come to play a significant role in the international system. It has proved to be an important mode of transportation that has a direct or indirect impact on agriculture, commerce, war and peace. Above all, it played a major role in transforming our world into a global village. 18 India is a growing economy and a major part of its GDP i. e. , 5% is contributed by the highly competitive Aviation Market. Due to the large population of India belonging to the middle class and young population, the tourist sector stimulates the aviation market.

Post 1991 economic liberation and privatisation of some major airlines, a huge number of investments also turned in, resulting in better infrastructure and hospitality. 19 In 2000–2001, there were around 14 million domestic passengers transported; by 2009–10, that number had risen to more than 45 million, an increase of more than three times. Over this time, the Indian sector had a 300% increase in size, compared to Canada's 150% expansion. Canada deregulated its aviation business later and has always seen far less competition than India. Therefore, it would seem that deregulation, especially when coupled with competition, might promote the expansion of the aviation sector. The average costs have constantly decreased in India while remaining stable in Canada, indicating a significant advantage for consumers from Indian practises.

Average rates have decreased, but unrestricted fares, which business travellers frequently pay, are usually believed to have increased consistently. This has prompted some commentators to claim that not all customers have profited from airline competition. 20 The aviation market being oligopolistic in nature, high competition is observed which often results in agreements between the airlines that have AAEC in India. Other reasons for the surcharge of prices can be acquisition, mergers and international rise on ATF. The evolution

18 William Fielding Ogburn, The Social Effects of Aviation 755 (Boston 1946).

19 International Air Transport Assossiation, The Importance of Air Transport to India (2018),

https://www. iata. org/en/iata-repository/publications/economic-reports/india--value-of-aviation/. 20 Vrajlal K. Sapovadia & Kandarp Patel, Competitiveness of Indian Business Vis-à-Vis Legal Provisions and Judicial Interpretation (Mar. 2006) (paper presented at IIMK Int’l Conf. on Competitiveness), https://papers. ssrn. com/sol3/papers. cfm? abstract_id=955060. and analysis of the case laws on anti-trust laws in India have been divided into three phases: a. Pre-economic liberation: After Independence, the economy of India was not in a good shape and it required government intervention. Hence, Government of India introduced many such economic constraints that helped low-scale industries to grow and shield them from foreign competition. The majority of the Indian population post-independence belonged Below Poverty Line and travelling by air was considered to be a luxury.

Hence, most people from upper class used to travel by air. Due to a low demand the prices for the tickets used to be high. Prior to the introduction of the Air Corporation Act, 195321 India had several private airlines like Ambica Airways, Air Services India, Darbhanga Aviation, Deccan Airlines, Himalayan Aviation, Jaimar, Jupiter Airlines, Kalinga Airline and Mistri. These airlines were stopped after the implication of the act, which nationalised all private airlines to improve the aviation sector. Subsequently, these airlines were closed due to insolvency, heavy market competition and rules and regulations. There was one successful government acquisition, which was the acquisition of Air India from Tata and Sons in1953. Post 1953 there were two major market players i. e. , Air India and Indian Airlines both under state control.

However, these two airlines had major competition resulting in unhealthy competition. Indian Airlines (today known as Air India) was involved in a well-known predatory pricing dispute in the 1980s. The lawsuit focused on Indian Airlines' use of strategic pricing to eliminate its rival, ModiLuft (later SpiceJet), from the market. This case demonstrated the importance of fair competition in the aviation sector and how important it is to stop anticompetitive behaviour that could negatively impact customers and impede business. The "Air Cargo Cartel" case, often referred to as the "Air Cargo Antitrust" case, dates back to the 1980s and concerns a number of antitrust inquiries and lawsuits involving significant international airlines and their alleged cooperation in setting air cargo shipping pricing.

A systematic scheme to influence air freight prices was exposed in this instance, which resulted in legal action and substantial fines.

21 Air Corporation Act, 1953, Act no. 27 of 1953, Acts of Parliament (India)

The legislative intent behind nationalization was to create a healthy market in India but it had some major drawbacks. Markets were mostly monopolistic in nature which resulted in low foreign investment, low-quality infrastructure, an ageing fleet, limited remote access and no fair competition in the market. The market development slowed around the early 90s not only because the economic constraints but also because of major global crises, like the USSR disintegration and the Gulf War. The fuel charges touched the sky and ultimately consumers had to bear the burden. It was then the government opend up the market for private players and the National Economic Policy 1991 was introduced. b. Post-economic liberation: India was undergoing a major Balance of Payment crisis in the late 80s and early 90s.

It was then India came up with the National Economic Policy 1991 with the goal of Liberalise, Privatize and Globalize (LPG) the Indian Market and stimulate the economy. As a result of it, Government quashed the laws that required licensing of certain markets. The Air Corporation Act 1953 was repealed which subsequently opened up a space for private owned airlines and increased foreign investment in India, open sky, regulations on direct import of ATF and created separate bodies that governed different sectors of Aviation, that have been mentioned above. Followed by that the aviation sector grew and there was a major change in its infrastructures. However, due to the high risk and market barriers not many people showed willingness to start their own airlines. There was not much difference in the airfares and majority of the population still opted for other modes of transportation.

In 2002 the Competition Act was implemented with the intent of fair competition in the market. Though there were no specific legislations for competition in aviation sector, most the cases till date are still dealt with the provisions of the Competition Act 2002. There were many mergers and acquisitions done in early 2000s which had an AAEC in India. Indian Airlines and Air India were two different state-owned airlines until the merger. They were struggling financially and were up against more private airlines. The Indian government made the decision to combine them in order to form a single, bigger, and more effective organisation. The combined power of the two airlines may, in principle, have resulted in more competitive pricing as a result of the merger.

However, due to numerous operational and financial difficulties the combined firm experienced, this gain was not realised in practice. The dynamics of the market were impacted by the merger. It had an impact on pricing, capacity, and routes in the Indian aviation sector. 22 c. 2014-2023: After the NDA government came into regime many major economic laws got amended, like demonetization and GST. The aviation market has subsequently grown and today a larger population opt for airlines to travel and any changes in the market brings a higher AAEC in India. Some of the recent events like the Air India and Vistara Merger 2023 and Go first Bankruptcy Case has impacted the market and consumer behaviour a lot. There are many such cases when airlines have been investigated on predatory pricing and parallel pricing methods to stimulate the market.

After the Odisha train accident case there was a sudden rise in the airfares from Delhi to Bhubaneshwar. 23 Code sharing agreements have resulted in an increase of better mobilization and reach in remote areas by international travellers, yet due to setbacks in the infrastructure consumers have to pay a greater amount to travel. The rise in ATF prices have also resulted in an overall airfares. The Russia-Ukraine crisis has resulted in rise in global airfares. 24

5. Major International Conventions on Aviation and Competition Laws

a) Warsaw Convention 1929: The Warsaw Convention, officially known as the Convention for the Unification of Certain Rules Relating to International Air Carriage, was a groundbreaking international convention signed in 1929. The Convention on International Civil Aviation created a set of rules and principles to regulate international air travel. Some of the important components included laws governing air carriers' responsibility for passengers, baggage, and cargo, as well as paperwork requirements for air travel. The Warsaw Convention was amended throughout time, leading to later accords such as the Hague Protocol of 1955 and the Montreal Convention of 1999. These agreements 22 Legal Bid Against Etihad’s Stake in India’s Jet Airways Ends, CH-AVIATION (Oct. 10, 2023, 9:30 PM), https://www. ch-aviation. com/portal/news/123308-legal-bid-against-etihads-stake-in-indias-jet-airways-ends.

23 Prasanna Mohanty, West Is Vigilant About Predatory Pricing, India Not, FORTUNE INDIA (June 16, 2023), https://www. fortuneindia. com/opinion/west-is-vigilant-about-predatory-pricing-india-not/113069.

24 Dr. Avtar Singh and Dr. Harpreet Kaur, Competition law 43-44 (Eastern Book Company, 2012)

modernised and enlarged the original convention's scope, boosting liability limitations and addressing other concerns related to international air travel. b) Chicago Convention 194425- The Chicago Convention (also known as the International Civil Aviation Convention) created the International Civil Aviation Organisation (ICAO), a United Nations specialised body responsible with coordinating and regulating international air traffic. The Convention specifies airspace restrictions, aircraft registration and safety regulations, and details the signatory' rights in connection to air travel; it also exempts aviation fuels from taxation. The Convention was signed on December 7, 1944, in Chicago, Illinois, by 52 states, and went into effect on April 4, 1947.

26 While the Chicago Convention primarily addresses safety, security, and technical elements of aviation, concerns about fair market competition in the airline sector are normally addressed through other processes and agreements. These concerns may include competition and antitrust rules, bilateral air services agreements, and the activity of organisations such as the International Air Transport Association (IATA). c) Montreal Convention, 2003: The Montreal Convention, also known as the Convention for the Unification of Certain Rules for International Carriage by Air, is a major international convention that governs air carriers' liability for accidents affecting passengers, luggage, and cargo during international air travel. It was enacted in 1999 in Montreal, Canada, and went into effect on November 4, 2003.

d) Guadalajara Convention: It was signed in Guadalajara, Mexico, in 1961, as the "Convention for the Unification of Certain Rules Relating to International Carriage by Air. " However, it went into effect in 1964. This agreement differs from the more wellknown "Montreal Convention" of 1999, however it has characteristics and handles comparable concerns with international aviation travel. The Guadalajara Convention was established to consolidate and modernise the regulations regulating air carriers' responsibility for passengers, luggage, and cargo. 27

25 Convention on International Civil Aviation, Dec. 7, 1944, 15 U.N.T.S. 295.

26 International Civil Aviation Organisation., The History of ICAO and the Chicago Convention,

https://www.icao.int/about-icao/history/pages/default.aspx (last visited Apr. 8, 2025).

27 S. Bhatt, Aviation, Environment and World Order 36–86 (APH Publ’g Corp. 2023).

6. Recommendations

The major drawbacks in the aviation market are observed to be in the Slot allocations and Code Sharing Agreements. These technical and managerial shortcomings have an AAEC in India resulting in high airfares. The Slot Allocations are sometimes misused by the airlines by frequent delays. Due to these delays passengers are forced to pay additional chargers of cab fares, waiting chargers, etc. The Slot Allocation guidelines were last revised in 2013, since then much technological development has occurred and hence it requires another revision. The ministry in 2022 did state about the revision to occur but no new notification has arrived till now. The action has to be taken soon to ensure better airport management. The code sharing agreements result in a lot of ruckus because of no proper public notices.

The passengers generally end up in confusion in boarding the connecting flights, this results in harassment of public and sometimes passengers miss their flights. There must be proper guidance provided to passengers and transparency should be maintained in such agreements. Apart from these problems in aviation industry, there is the problem of parallel pricing and predatory pricing. Such pricing methods are mainly observed during emergency situations and festive seasons. The airlines try to capitalize by increasing the prices as demands are high. The ministry did include a lower cap on the price of air tickets but did not put an maximum price cap, which gives airlines a chance to take advantage of the market demand. There is a need of maximum price capping done by the ministry so that airlines when on high demands exploit consumers.

7. Conclusion

The study highlighted the intricate and dynamic link between law and economics in India's aviation sector. In recent years, the Indian aviation sector has seen tremendous development and transformation, fuelled by liberalisation, economic expansion, and increasing connectivity. However, this expansion has been hampered by legislative frameworks, infrastructure limits, and economic viability issues. Our research has revealed the critical impact of regulation and policy in influencing the aviation landscape. The sector's liberalisation has allowed for new entries and competition, but it has also created issues in guaranteeing fair market practises, safety, and environmental concerns.

In balancing these interests, the interaction of regulatory agencies, government programmes, and market forces is critical. Economic considerations such as market demand, fuel costs, and cost structures all have a substantial impact on the industry's dynamics. India's aviation business has endured times of prosperity as well as financial difficulties, highlighting the importance of thorough economic research in order to maintain a viable and resilient economy. Furthermore, our study has shown the significance of infrastructure development and investment in supporting industry growth and competitiveness. Airports, air traffic management systems, and related infrastructure are vital components that must be maintained and invested in on a regular basis.

In the backdrop of India's ambitious Vision 2040 for the aviation sector, it is obvious that the intersection of law and economics will remain a fundamental driver of the industry's trajectory. To achieve the envisioned goals, effective and balanced laws, policies that encourage fair competition, and economic methods that increase efficiency will be required. Looking ahead, the Indian aviation industry has both possibilities and problems. To address challenges like as safety, sustainability, and market competitiveness, regulators, industry stakeholders, and the government will need to work together. India can continue its journey towards a robust and internationally competitive aviation industry by aligning legislative and economic frameworks with the sector's growth aspirations.

This study adds to the continuing debate in India about the legal and economic analyses of the aviation sector, and it gives useful insights for policymakers, industry executives, and academics as they navigate this complicated and changing field.