Undercutting of Fares in the Aviation Industry

Undercutting of Fares in the Aviation Industry

Terence Benedicto Sequeira & Tarun
Research Associate & Teaching Assistants, Gujarat National Law University, Gandhinagar

Predatory pricing is defined as pricing a commodity below an appropriate measure of cost with the intention and purpose of eliminating a competitor. Essentially, in cases of predatory pricing, the predator forgoes his present revenues by lowering the prices of the commodity supplied by him in order to drive a competitor out of the market. In the aviation industry, the allegations of predatory pricing arise w hen a major airline, while operating from its hub airport, in response to the entry of a low – fare carrier, lowers its price aggressively and also adds capacity. Such targeted response of major airlines usually forces the exit of the low – cost airlines from the market. Anti – trust law requires to prove that the predator priced the fares below its costs and selectively accepts losses in the market and later cushions such losses by imposing high fare and hub traffic in a comparatively lesser competitive market. The researchers will try to examine these concerns from a legal lens. Moreover , the researchers will give reasonable solutions to these pathologies by comparing the system adopted by other jurisdictions.

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