The Competition Commission of Pakistan (CCP) has issued an opinion under Section 29 of the Competition Act, 2010 setting out its recommendations in the matter of establishment of a single flight kitchen by the Civil Aviation Authority (CAA) on a joint venture basis at the New Islamabad International Airport.
The Opinion follows an open hearing held on 22 September 2016 in which CAA, domestic and international airlines, and catering companies participated.
CCP has noted in the opinion that the establishment of a single flight kitchen at the new Islamabad International Airport raises certain competition concerns in its current form and has given its recommendations to remove the same.
CCP has noted that the entry barriers created as a result of the single flight kitchen must be balanced by technical or economic progress, a fair share of which is passed on to the end consumers. However, it recommended that if an adverse impact on competition is outweighed by any resulting benefits, then any party winning the contract of the single flight kitchen at the new Islamabad Airport must seek exemption from CCP under Section 9 of the Competition Act on a pre-emptive basis for the exclusivity.
CCP further stated in its opinion that CAA must ensure that the single flight kitchen would never at any point abuse its monopoly position. In this regard, it was noted that as a commercial partner in the single flight kitchen, CAA may face a conflict of interest in terms of regulating the same. CCP therefore, recommended that CAA must consider other business models so that its commercial interest does not conflict with its regulatory role.
Moreover, CCP viewed that if CAA chooses to adopt an airport fee or royalty-based business model, the tariffs must not be so high so as to discourage airlines from uplifting meals from the new Islamabad International Airport.
Lastly, the CCP recommended that at no point should any of the airlines be barred by CAA to uplift meals from any feasible off-premises options available to them.
The purpose of the recommendations provided for in the opinion is to serve as guidelines for CAA and any party that is successful in obtaining the tender to run the single flight kitchen at the new Islamabad International Airport so that a situation that results in restriction or distortion of competition in the in-flight catering to the detriment of general consumers can be avoided.
The detailed opinion, issued by a bench comprising Chairperson Ms. Vadiyya Khalil and Members Mueen Batlay and Dr. Shahzad Ansar, can be accessed on CCP’s website www.cc.gov.pk.