FCCPC, NCAA to investigate alleged coordinated airfare hike by airline operators
Executive Vice Chairman, FCCPC, Mr. Babatunde Irukera
The Federal Competition and Consumer Protection Commission (FCCPC) in collaboration with the Nigerian Civil Aviation Authority (NCAA) has commenced an investigation into the recent airfare increase by domestic airline operators in the country.
The Executive Vice Chairman and Chief Executive FCCPC, Mr. Babatunde Irukera says, the action of the operators was in fragrant Violation of Section 107 (1)(a) and Section 108 of the Federal Competition and Consumer Protection Act, 2018 ( FCCPA).
In a statement captioned, “Coordinated increase in airfares by certain scheduled operators”, Mr. Irukera says, Section 107 (1)(a) forbids competitors from fixing prices, and Section 108 prohibits any conspiracy, combination, agreement or arrangement between competitors in any manner that unduly restrains or injures competition.
According to him, the current Nigerian Civil Aviation Regulations Air Transport Economic Regulations 18.15.2 (i) and (iii) “prohibits airlines from engaging in any contract, arrangement, understanding, conspiracy or combination in restraint of competition which includes directly or indirectly fixing a charge, fee, rate, fare or tariff and any collusive action”.
The FCCPC boss says, the airlines were guilty of price fixing as they did so in a coordinated manner emphasizing that, the FCCPA prohibits conduct or any coordination between competitors including on the platform of trade associations.
“In the circumstances, the Commission is in addition to engaging the relevant stakeholders entering and dispatching interim orders under Sections 17(a),(e),(l),(s),18(3)(a), 157 and 158 of the FCCPA prohibiting the performance or continuation of any agreement or arrangement associated with, or resulting from discussions, deliberations, debates, argument or resolutions of/at any meeting of the AON or its members regarding any increase in airfares and or any conduct not necessarily directly in compliance, but in response to changes in the market on account of a compliance by others”.
Mr. Irukera states that, they became aware of the increase after series of meetings held by the Airline Operators of Nigeria, AON, adding that, investigation revealed that, there was significant controversy and or an initial lack of consensus with respect to coordinated conduct resulting in setting airfares.
He disclosed that, airlines like Air Peace, Azman Air, and United Nigeria Airlines immediately proceeded with the increase, followed by Arik.
“However, on Friday, February 18, 2022, at 6:31 p.m. Aero Contractors informed its trade partners (travel agents) and its commercial executive team by email that ticket fares were reviewed effective February 18, 2022, with the least fare being N50,000 across all routes. Aero Contractors noted in this communication that all other airlines have effected same increase”.
“Within days, Max Air also increased fares to the same minimum N50,000. Ibom Air and Dana approximately 48 hours after what appears to be the initially coordinated conduct, also increased fares”.