FG Begins Probe Of Airlines Over Alleged Collusion To Fix Airfares

The Federal Government has frowned at the alleged collusion by domestic airlines to fix airfares on all domestic routes.

Naija News understands that an email had circulated on Tuesday allegedly by a domestic carrier to its travel agents, stating an increase in its airlines’ fares.

A part of the said mail dated February 18, 2022, had noted that the airline’s ticket fares have been reviewed with the least fare at N50,000 across all its routes.

While stating that the hike was necessary due to the current hike in prices of aviation-related materials, services, and exchange rate, the alleged airline company urged all its patronisers to understand the situation and support to sell out its stated fares.

Naija News reports that price-fixing is a practice whereby rival companies come to an illicit agreement not to sell goods or services below a certain price.

The sudden hike in airfares by all domestic carriers lately has raised eyebrows and the government is offended by the move.

On Tuesday, aside from Green Africa Airways, airlines are observed to have raised their airfare for a one-hour flight in economy class to as high as N50,000.

This indicated a jump of over 60 per cent, considering the fact that airfares for such tickets were between N26,000 and N30,000 a few weeks ago.

Reacting, however, to the development, the Executive Vice-Chairman/Chief Executive Officer of the Federal Competition and Consumer Protection Commission, Babatunde Irukera, said the FCCPC was aware of the latest concern in the aviation sector.

Irukera in a statement on Tuesday told newsmen that the commission had commenced investigations into the issues raised by both passengers and other concerned observers in the aviation sector.

He said, “We’ve been engaging the Nigerian Civil Aviation Authority on that. Firstly, it is against the law for competitors to coordinate and come together to discuss or agree on a price. That is forming a cartel.

“But an announcement in itself will not be sufficient evidence of the cartel. You need to investigate and discover if there is such a cartel. Now the articles we’ve read seem to suggest that they agreed as an airline association. But we haven’t seen any evidence of that.

“And because the cartel is criminal and will involve monetary penalties, it requires evidence to clear every doubt. So we need to find the evidence if that’s what happened, for instance, one airline has said to us, ‘no, we were never part of any announcement’.”

Irukera added, “They said others increased airfares and they saw an opportunity to increase their own, which was part of market forces. So it is now for us to gather the evidence to narrow it down to a violation of law, to at least show that it was coordinated conduct.”

According to Irukera, the commission would issue a public statement on the development soon, adding that the FCCPC was currently “gathering evidence to see at what point in their systems did the airlines changed their fares.”

Irukera said, “This is to see if there was any coordination or if was a response to what another airline did or not. So the short answer to this is that any coordinated conduct or agreement with respect to price among competitors is a violation of law and the FCCPC strongly rejects that and will pursue it.

“However, in this case, we are gathering information at this point to find the evidence or the lack thereof.”

Speaking about the alleged circulating email, the airline boss said it is similar to what the commission has seen in other places.

“It actually doesn’t provide evidence of a conspiracy,” he said.

He added: “However that all airlines seem to have adopted N50,000 is curious and evidence requiring further interrogation which is what we are doing.”

Naija News understands that reports on Tuesday have revealed that airlines had implemented the hike, as Air Peace and Ibom Air’s one-way flights for February 23, 2022, from Abuja to Lagos, for instance, were all marked N50,000, in contrast to rates within N26,000 to N35,000 some weeks ago.

It was observed that domestic carriers including Air Peace, Arik Air, AZMAN Air and United Nigeria Airways had all fixed their minimum economy class tickets for a one-hour flight at N50,000.

Others that fixed the same minimum rate for economy class tickets on an hour flight include Max Air, Aero Contractors and DANA Air.

It was, however, observed that only Green Africa Airways had a rate below N50,000 for an economy class ticket for same duration. Green Africa Airways is said to be operating the model of a budget carrier, hence, its decision to keep its fares relatively lower.

The local airlines had recently stated the fluctuations in exchange rate, hike in aviation fuel price, which increased from N190/litre to N400/litre between 2021 and 2022, would cause an increase in airfares.

The airlines had also decried the difficulty they faced when trying to access foreign exchange at the official window, hence many domestic carriers had resorted to sourcing the United States dollars at the parallel market at rates above N550/$.

When contacted on whether the NCAA would intervene in the current hike in airfares, the spokesperson of the authority, Sam Adurogboye, replied, “Airfares have been deregulated and as such is governed by market forces and not by the NCAA.”

This article was originally published on Nigeria News