The attempt by domestic carriers to form a cartel has hit an air pocket even before it could be put to a test flight. Industry sources say the newly-formed Federation of Indian Airlines — comprising eight domestic airline companies — had in principle agreed that full-service carriers like Jet, Kingfisher and Indian Airlines would not price tickets lower than Rs 2.40 a mile. Low-cost airlines like Air Deccan, SpiceJet and Indigo would not price tickets lower than Rs 2.

While this will not have a major difference on short-haul sectors like Delhi-Bhopal, it would have resulted in a price difference of between Rs 700 and Rs 1,000 on long-distance flights like Delhi-Cochin.

The sources said many full-service carriers even changed their systems to ensure the floor prices, though it gave a lot of leeway to low-cost carriers. The move, they claimed, was to check the use of gimmicks like tickets at throwaway prices.

The companies reached an agreement twice, first to be executed in November 2006. The second attempt was made in January 2007. But the cartelisation broke both times, with low-fare carriers demanding a free run at the last minute.

When contacted, Siddhanta Sharma, CEO, SpiceJet, said specific figures for pricing were never discussed. There were talks about bringing some rationality, but no concrete proposals were placed, he insisted. Air Deccan COO Warrick Brady said discussions were very generic.