The ministry of civil aviation is planning to put a cap on marketshare of entities formed after mergers between airlines.
A proposal has been drafted by the ministry, which could determine if mergers can be allowed when the new entity exceeds the cap. However, the cap is still to be decided on.
Marketshare will constitute not only the number of passengers carried, but also the percentage of airport infrastructure and routes controlled by the merged entity.
At the moment there is no cap on marketshare for M&As. In the aborted Jet-Sahara deal MRTPC assessed the case to ensure there were no restrictive trade practices.
Under the competition law, which has still not been implemented, market dominance rather than marketshare determines whether a deal is anti-competitive. In the case of the Jet-Sahara deal, MRTPC cleared the deal saying that it did not entail any monopolistic threat.
According to the norms laid out by the civil aviation ministry, which were approved in May this year, the transfer of airport infrastructure and flight rights after the merger of two airlines will not be automatic but be guided by the usage of these rights.
This will mean that the acquiring company can get the infrastructure of the airline it acquires only if it is willing to use such infrastructure.
As airport infrastructure is owned by the government or the AAI, an airline with surplus parking bays and hangars cannot transfer it automatically to another airline after a merger. However, there are no restrictions on transfer of flight routes.
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