Aviation and Aerospace Development Minister Festus Keyamo has urged the Federal Competition and Consumer Protection Commission (FCCPC) to collaborate with the Nigeria Civil Aviation Authority (NCAA) to resolve the impasse over alleged exploitative ticket pricing.
He faulted the FCCPC’s statement on the pricing methodology of Air Peace, saying both Federal Government agencies should have worked with the airline to resolve the matter harmoniously.
The minister noted that though the FCCPC is not on the same page with the airline on the modus operandi of arriving at its fare structure, it should have contacted the NCAA before going public on the matter.
Last week, the airline honoured the invitation of the FCCPC during which the airline’s management team presented its position on how it was addressing allegations of air fare pricing and alleged poor service delivery.
Speaking on a national television proramme last night, Keyamo, while responding to questions on the issue, said: “…The power to regulate these airlines and for the airlines to inform (the travelling public) about their price increase and all of that is domiciled in the Nigeria Civil Aviation Authority (NCAA). That is the core agency.
“They should have contacted the NCAA for them to look at the books, which we have been doing. So, we would have given them the facts. But to single out a few airlines that we are struggling to expose to the world for them to get more enhanced capacity; it was a bit careless.”
Keyamo noted that the issue at hand was not about exploitation but the airline industry’s capacity limitations, especially on aircraft acquisition and servicing routes.
He said: “What we are facing is a problem of capacity of the airlines to acquire aircraft and to service their routes. Again, we have things that are totally out of our control, which is the issue of the fluctuation of the forex – the exchange rate – that affects everything in aviation. Everything in aviation is dollar-based.”
He said Nigerian airlines spent majorly foreign exchange due to their needs to hire aircraft under leading arrangements.
“All of these are foreign exchange issues. With the fluctuating nature of our naira against the dollar, you will expect that it will affect also their cost of operation.
“Now, what we are, therefore, doing is to ensure that we expose them to the markets across the world where they can access aircraft on very good terms. This will impact the prices of tickets and their cost of operation.
“That is what led us to addressing the issue of the practice direction, pursuant to the Cape Town Convention. That is the core of the problem of the aviation industry that this President and Vice President graciously supported us to get to, and we are there now.”
Keyamo promised to lead a Nigerian delegation to Dublin next month to meet major airline financiers and discuss how to access aircraft at better rates.
The minister noted that such a move would positively impact ticket prices and operational costs.
“All the major airline financiers, aircraft financiers, and liaisons are all gathered there (in Dublin). For the first time, they have invited Nigeria to say, because of what we have done, because of the fact that all these efforts we have made to make them access these markets around the world, have increased our compliance score from 49 per cent to 75.5 per cent, for the first time in history, all credit to the policies of President Bola Ahmed Tinubu.”
Also, the FCCPC said it was going ahead with its enquiry into Air Peace’s pricing practices that sparked allegations of unjustified fare increases on advance bookings for certain domestic routes.
The allegations also include lack of transparency in pricing structures and practices that potentially contravene consumer rights and fair competition principles.
The commission warned the airline not to obstruct the enquiry.
The FCCPC refuted a syndicated report in a section of the media, saying it misrepresented what transpired at a meeting it held with the Air Peace team on December 3 at the commission’s Abuja headquarters to verify the veracity of allegations contained in the petitions it received from the airline’s passengers.
A statement in Abuja by FCCPC’s Director of Corporate Affairs, Ondaje Ijagwu, reads: “Although Section 33 of the Federal Competition and Consumer Protection Act (FCCPA) 2018 grants the commission discretionary power to conduct enquiries in public or in camera, the FCCPC chose to conduct the December 3 session in camera as a gesture of good faith to preserve the confidentiality.
“But no sooner had the session ended than leaks appeared in the media attributing unfounded but prejudicial statements to the commission’s officials, categorically declaring that Air Peace was not under investigation, and copiously quoted the Air Peace’s Chairman, Mr. Allen Onyema, engaging in ostentation of self-adulation.
“Curiously, the same media leaks omitted a boastful statement by Mr. Onyema at the same December 3 engagement that he could decide to shut down the airline, ostensibly to show he was doing the nation a favour by flying.
“Even more disturbing was the assertion by Air Peace at the press conference that the sum of between N500,000 and N700,000 should be the ideal fare for a one-hour domestic flight in Nigeria. It claimed it spends an average of N7 million to fuel an aircraft for a one-hour flight. But some of the petitions by consumers before the commission strongly contest such claim. The argument is made that the typical Boeing 737-500 flown by Air Peace takes N4 million to fill a tank of 4,500-litre Jet A1 capacity.
“With a full load of 120 passengers by a Boeing 737-500 vessel, a whopping N24m is earned when a one-hour flight is sold at the current average of N200,000. At the N500,000 being proposed by Air Peace as the ‘most ideal fare’, it then means a Boeing 737-500 would be fetching a whopping N60 million per one-hour service!
“Interestingly, at a time Air Peace proposes N500,000, another airline has reduced fare to N80,000 on not just one-hour Abuja-Lagos flight but also on other domestic routes, thereby demonstrating that affordability and operational sustainability can coexist in the same operating environment. That recent singular action by a competitor has led some petitioners to ask whether the fuel Air Peace uses is being imported from the United States at a higher cost.”
The FCCPC faulted some counter-claimed by Air Peace, saying the airline was attempting to whip up public sentiment over the matter.
“As stipulated in Section 17(e) of the FCCPA 2018, the FCCPC is mandated to carry out enquiries considered necessary or desirable in connection with any matter falling within the purview of the Act. Furthermore, Section 127(1)(a) empowers the FCCPC to ensure that pricing practices across all sectors, including aviation, are fair, competitive, and non-exploitative. Specifically, it states that no undertaking shall offer to supply or enter into an agreement to supply goods or services at a price or on terms that are manifestly unfair, unreasonable, or unjust.
“Pursuant to Section 148(3)(c) of the FCCPA 2018, the FCCPC, upon receipt of a consumer complaint, can direct an inspector to institute an enquiry and investigate the matter as quickly as practicable to determine whether the undertaking has acted inconsistently with the provisions of the Act.
“The enquiry into Air Peace’s pricing practices stems from allegations of unjustified fare increases on advance bookings for certain domestic routes, lack of transparency in pricing structures and practices that potentially contravene consumer rights and fair competition principles,” the commission said.
The FCCPC said it would continue and conclude its ongoing investigation against Air Peace to enable it take the appropriate action in accordance with the provisions of its establishment Act.
