…fare increase long overdue – operators
The Federal Competition and Consumer Protection Commission (FCCPC) has ordered airline operators to immediately discontinue the current implementation of airfare increase pending the outcome of its investigation.
The Executive Vice Chairman of FCCPC, Mr Babatunde Irukera, said this in a statement on Wednesday in Abuja.
Irukera said the interim order was in line with Sections 17(a),(e),(l),(s),18(3)(a), 157 and 158 of the FCCPAct.
Irukera said that the commission’s investigations revealed that airline operators in supposedly association meetings discussed multiple industry-wide issues; particularly challenges experienced by their members.
He said that credible information revealed that while attendees at the meeting did not arrive at a consensus, the meeting ended in a resolution that encouraged or consented to the coordinated conduct.
According to him, the FCCPA prohibits conduct or any coordination between competitors including on the platform of trade associations.
”Specifically, Section 107 (1)(a) forbids competitors from fixing prices, while Section 108 prohibits any conspiracy, combination, agreement or arrangement between competitors in any manner that unduly restrains or injures competition.
”Coordination in increasing prices otherwise known as the cartel is an unambiguous infringement of the FCCPA.
”The current and prevailing Nigerian Civil Aviation Regulations (Air Transport Economic Regulations) in Regulation 18.15.2 (i) and (iii) expressly prohibits airlines from engaging in any contract, arrangement, understanding, conspiracy or combination in restraint of competition.
”This includes directly or indirectly fixing a charge, fee, rate, fare or tariff and any collusive action.
”The commission in addition to engaging the relevant stakeholders is 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.
”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 compliance by others,” he said.
Irukera enjoined scheduled domestic airline operators to ensure strict and prompt compliance with the interim order pending the outcome of the commission’s investigation.
Meanwhile, some Domestic Airlines` Executive Officers have said that the hike of airfares was long overdue.
The officers made the assertion in separate interviews, on Wednesday in Abuja.
According to them, some charges to be paid by the airlines had skyrocketed, while most maintenance services were paid with foreign exchange.
The Managing Director of Aero Contractors, Capt. Mahmoud Abdullahi, who said that air fares’ hike was overdue, maintained that the fuel price had kept increasing, with some service providers increasing their tariff by more than 250 per cent.
“ The airline fare hike is long overdue, as you are aware of the increase in fuel price and forex.
“Additionally, of recent, the service providers, SAHCOL and NAHCO, increased their tariff by 250-300 per cent; at the international airport it is even a 500 per cent increase.
“Fares that you see now have always been in the airlines inventory. What airlines do is to close lower bucket fares and open next fare bucket, but those lower fares are still in the airlines’ inventory, “ he said.
According to Abdullahi, although airlines may experience low patronage, they have to survive.
The managing director said that every move by the airline was in the interest of safety.
He pointed out that airline income was in naira, while most of their expenditure was in forex.
“Regulators play a very good role in pricing. If an airline price its ticket so low, regulators have to investigate to find out how this airline can meet its obligations with the price that it is charging.
“They have to make sure the airline does not cut corners on maintenance, “ he said.
Abdullahi explained that no airline would intentionally delay or cancel flights, but due to variables including; weather, technical, airport facilities, sunset, the airport, among others.
The Azman General Manager, Mr Suleiman Lawan, who also spoke said, said that it had reached a time when the air fares could no longer remain the same as before.
According to him, aircraft handling was different from other transportation systems.
He stated that the tickets started from N27, 500 up to N35, 000, before reaching about N50, 000 now.
“Every day you have to plan for importing spare parts, which is in US dollars and you cannot get such money from the government; it’s only from parallel market. Also A-jet fuel is in the higher price.
“Handlers have increased their charges, even the government has increased their charges. So, based on the above explanation how can airlines survive the situation.
“Apart from that, they have so many responsibilities to handle, including payments of salaries, aircraft checks out of Nigeria, for which they have to get the money from the same parallel market,“ he said.
Lawan urged the government to assist airlines in some of their responsibilities.
According to him, the airlines are looking for a break through and not even making profits.
Also speaking with said, the Max Air Executive Director, Mr Harish Manwani, said that the airlines ought to increase the fare in order to cope with the daily expenses of sustaining their operations.
Manwani noted that that was the only way to go for now.
He noted that Max Air hardly delayed or cancelled flights, except for extra ordinary weather conditions.
“Even with low turnout, the airline has flights flown on its routes across the country, “ he said