The Federal Government has ordered airlines operators in Nigeria to immediately suspend the hike in fares on the domestic routes recently enforced on account of foreign exchange, cost of ground handling services, and rising cost of jet fuel among other issues.
The Federal Competition and Consumer Protection Commission (FCCPA), which gave the order yesterday, also banned the airlines against price fixing, saying it contravenes the competition law.
The Executive Vice Chairman/Chief Executive, FCCPA, Babatunde Irukera, said this in an “Interim Statement Regarding Coordinated Increase in Airfares by Certain Scheduled Domestic Airline Operators.”
Irukera said: “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, and 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 cartel) is an unambiguous infringement of the FCCPA.”
Specifically, 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.
Airline Operators of Nigeria (AON) a trade association for domestic airlines, after a series of meetings in February decided to increase ticket cost to a minimum of N50,000 on the domestic routes.
However, Irukera noted that “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, which includes directly or indirectly fixing a charge, fee, rate, fare or tariff and any collusive action.”
Besides, he admitted that the FCCPA, Civil Aviation Act and implementing regulations of both legislations respect the right and prerogative of airlines (as other businesses) to set their fares independently subject to, and in accordance with prevailing law and applicable processes.
He informed that since the prevailing law expressly prohibits coordination, agreement or cooperation between competitors in setting fares, the Commission in collaboration with the Nigerian Civil Aviation Authority (NCAA), had to step in to investigate the matter.
While the investigation continues, Irukera insists “there is sufficient probable cause to proceed and also provide interim measures to restore a free and undistorted domestic aviation market.”
This led to the ban on AON members against “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.”
The Commission therefore charged domestic airline operators to ensure strict and prompt compliance with the Interim Order pending outcome of its investigation.