Summary

BACKGROUND:

The Commission took suo moto took cognizance of excessive and discriminatory pricing in flight rescheduling and cancellation charges and conducted an in depth enquiry into the matter. The inquiry officers discovered that PIA was basing its rescheduling/cancellation charges as a percentage of the ticket fare, which is discriminatory in nature and thus, prima facie, violates Section 3 of the Competition Ordinance. Therefore, a Show Cause Notice was issued and detailed hearings were conducted.

In its analysis, the Commission looked into the notion of ‘price discrimination’ holding that price discrimination by a dominant player is anticompetitive. In PIA’s case, it held that the shift from charging a fixed administrative fee for rescheduling to a percentage-based fee amounted to price discrimination and was not permissible under the law.

The Commission also discussed the concept of versioning which, although amounted to price discrimination, was also welfare enhancing and therefore, permissible.

ORDER:

The Commission disposed of the matter vide its Order dated 8-12-2009 and upon a proposal being made by the PIA to remove the discriminatory fee structure, took a lenient view and did not imposed any penalty, however, PIA was directed to implement the proposed non-discriminatory rescheduling fee structure in letter and spirit as of 01-01-10, and the passengers who wish to reschedule his/her flight to an immediate preceding flight be allowed to do that without any charges.

CURRENT STATUS:

MEMO of Appeal was returned by the Appellate Bench of the Commission, being defective and so far PIA has not filed re-filed the appeal.