Minister, operators, FCCPC bicker over airfare pricing regulatory rights

The pricing regulatory faceoff between the Federal Competition and Consumer Protection Commission (FCCPC) and Air Peace Airlines took a more confrontational turn yesterday as aviators, including the Minister, faulted the FCCPC for its “meddling” in aviation matters.

While the consumer protection body yesterday chided Air Peace for attempting to obscure ongoing inquiry into “exploitative pricing and other violations of consumers’ rights”, Minister Festus Keyamo rued FCCPC’s intervention without first consulting the Nigeria Civil Aviation Authority (NCAA).

Similarly, experts in the air transport sector also bemoaned the NCAA’s alleged complicity in regulating airfare pricing, which they argued warranted the FCCPC’s “undue” interference.

The aviators acknowledged that fare pricing regulation was imperative and in the interest of consumers but quickly added that such oversight functions are the NCAA’s statutory economic regulatory affair.

It will be recalled that the management of Air Peace Airlines was summoned to a meeting by FCCPC over alleged consumer exploitation, leading to the latter opening a full-blown investigation of the leading flag carrier.

Scandalised by the allegation and publicity of the inquiry, Air Peace pushed back on the alleged victimisation of its operations by the FCCPC who it claimed lacked an understanding of airlines’ cost of operations and pricing mechanisms.

Indeed, fare pricing belongs to the Nigeria Civil Aviation Regulations (Nig. CARs) Economic Regulations Part 18, which is the statutory remit of the apex regulator – NCAA. While fare pricing must be cost-reflective for safety and security purposes, airlines are duty-bound to notify the NCAA of changes in pricing.

While Aero Contractors and XeJet Airlines have rolled out fares below N100,000 for a one-hour flight, others have kept the fares at an average of N140,000, warning that one-way Economy fares may hit N200,000-plus during the festive peak period.

However, the Director of Corporate Affairs, FCCPC, Ondaje Ijagwu, said that as stipulated in Section 17(e) of the FCCPA 2018, the FCCPC is mandated to carry out inquiries considered necessary or desirable in connection with any matter falling within the Act’s purview.

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, 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 can, upon receipt of a consumer complaint, direct an inspector to institute an inquiry and investigate the matter as quickly as practicable to determine whether the undertaking has acted inconsistently with the provisions of the Act.

Ijagwu added that the inquiry into Air Peace’s pricing practices stemmed from allegations of unjustified fare increases on advanced bookings for certain domestic routes and a lack of transparency in pricing structures and practices that potentially contravene consumer rights and fair competition principles.

“Even more disturbing was the assertion by Air Peace at the press conference (on Friday) 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 claims. 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 N24 million 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!”

He said besides pricing, some petitioners have accused Air Peace of cancelling flights arbitrarily without care or compensation for passengers.

“For the avoidance of doubt, let it, therefore, be noted that no amount of blackmail or cowboy tactics can stop the Commission from the ongoing thorough investigation of the allegations against Air Peace with a view to taking the appropriate action in accordance with the provisions of the FCCPA,” Ijagwu said.

Aviation Minister Keyamo replied that FCCPC’s statement on Air Peace’s pricing methodology was “careless” and added that the agency should have contacted the NCAA directly instead of going public.

In an interview with Arise News yesterday, Keyamo stated that the power to regulate airlines and the obligation for these airlines to notify about price increases lies with the NCAA.

“They (FCCPC) should have contacted the NCAA for them to look at the books, which we have been doing. So, we would have given them 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,” he added.

Keyamo added that the issue at hand was not one of exploitation but rather the airline industry’s capacity limitations, especially regarding aircraft acquisition and servicing routes.

For his part, Aviation Security Consultant Group Captain Ojikutu (rtd) regretted the development and its dire implications for the local air transport sector.

Ojikutu said the meddlesomeness continued to fester because none of the political officeholders in the industry knew the legal requirements, regulations, or authority behind their functions.

“The FCCPC should not and cannot address any aviation operators without addressing the Aviation Regulatory Authority, the NCAA. It is not different from the Ministry of Aviation spreading its authority to the airspace administration as if the Air Force does not exist.

“Those in the administration of our government and the management of the agencies must be very careful in the manner that the Nigeria Aviation is being handled before something goes wrong.”

Ojikutu, the Commandant of Lagos Airport in the ’90s, said whoever gave another government agency like the FCCPC economic regulatory authority on aviation operators, besides the NCAA, is adding to the “institutional corruption in the sector”.

“Economic regulations of the sector by the NCAA is to ensure that operators’ safety and health are guaranteed. Sharing that responsibility outside the sector is not different from the involvement of AMCON in the operation and the management of Arik and Aero under whatsoever named receivership. If it is economically necessary to take the economic regulations away from the NCAA, we better do so than creating regulatory conflicts between government agencies,” he said.

Ojikutu emphasised that safety and security remain the primary preconditions of airline operations, for which Economic Regulations Part 18 was designed for NCAA enforcement.

“But the non-compliance to Part 18 essentially by operators and regulator (NCAA) is the bane of Nigerian civil aviation. That is the reason everyone wants to come, eat, and go. Thirteen ministers in 24 years, and so also are the CEOs of the agencies!”

Head of Research and Corporate Travels at Zenith Travel and Consul, Olumide Ohunayo, reckoned that the FCCPC is responsible for promoting consumer competition, marketing competing and protecting consumers, and not out of place to be concerned about consumer complaints from the air transport sector.

Ohunayo added that the current director of the aviation desk at the FCCPC was the former director of consumer protection at the NCAA, “so there is a direct link and collaboration between the two agencies”.

“Therefore, there is no need for the Air Peace COO to start getting emotional about the FCCPC, which is just doing its job of protecting the consumers. The airline should also state its defence against the accusations. There is no need for emotional lines here.

“I also have a problem with regulators, FCCPC inclusive, raking in revenue for the government. It is only in Nigeria that regulators are revenue earners for the government, and it is weird. Yet, the airlines’ fares are high, passengers are complaining about fares, and operators are crying over multiple taxes and charges. The regulators are part of the problem of exploitative fares, and maybe this episode will help us to start addressing the real issues,” Ohunayo said.