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Airfare increase: FG probes domestic airlines

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The Federal Government has begun investigations into the latest increase in airfares by domestic airlines and the alleged collusion by the airlines in the fare fixing arrangement.

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

A report by The Punch indicated that efforts are currently ongoing to unravel reasons for the sudden hike in airfares by all domestic carriers, as the airlines, aside from  Green Africa Airways, raised the airfare for a one-hour flight in economy class to as high as N50,000.

This amounts to over 60 per cent hike in the domestic airfare, as the rate was hitherto between N26,000 and N30,000 a few weeks ago.

It quoted an email allegedly sent by a domestic carrier to its travel agents stating that all airlines had effected the same increase in airfares.

This is said to be suggestive of a unanimous decision by domestic carriers to engage in price fixing.

The email read in part, “This is to update you that effective today, February 18, 2022, the airline’s ticket fares have been reviewed with the least fare at N50.000 only across all our routes.

“This has become necessary in view of the current hike in prices of aviation related materials, services, and exchange rate.

“It is worth noting that all other airlines have also effected same fare increase. We crave your understanding and support to sell our stated fares.”

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.

He was quoted as saying 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 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 cartel. Now the articles we’ve read seem to suggest that they agreed as an airline association. But we haven’t seen an evidence of that.

“And because 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 a coordinated conduct.”

He said 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.”

Aviation

British Airways suspends short-haul flights from Heathrow

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British Airways has suspended the sale of short-haul flight tickets departing from Heathrow airport over persistent ndustry challenges.

Short-haul flights are trips lasting anywhere from 30 minutes to 3 hours.

In a statement on Tuesday, BA said the move was in response to Heathrow’s request for airlines to limit new bookings and will last till August 8.

“We’ve decided to take responsible action and limit the available fares on some Heathrow services to help maximise re-booking options for existing customers, given the restrictions imposed on us and the ongoing challenges facing the entire aviation industry,” the statement read.

It added that the suspension of ticket sales would affect flights to domestic and European destinations.

On July 12, 2022, Heathrow said it would restrict daily departing passengers to 100,000 as the industry continues to face several challenges.

Europe’s biggest airport (by passenger numbers) said its decision to restrict travellers numbers was taken “in the best interests of passengers” to provide “better, more reliable journeys this summer.”

The airport said it was happy that British Airways, its biggest airline, followed the request.

“We are pleased to see action from British Airways, acting responsibly and also putting passengers first,” it said.

The global aviation industry is facing numerous challenging as it strives to bounce back from the Covid-19 pandemic.

In Nigeria, the sector is facing rising costs of aviation fuel, insecurity and infrastructural challenges, which have limited flight operations and exponentially increased airlines’ cost of operations.

In a meeting on Wednesday, Hadi Sirika, minister of aviation, said the aviation fuel crisis was a global problem, adding that Nigeria plans to address it by revamping its refineries.

“It is aggravating in Nigeria because we don’t produce the product,” he had said.

“It’s aggravated also because the foreign exchange is scarce in Nigeria because the source of earning the foreign exchange also has dwindled.”

 

 

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Poor airports infrastructure denying Nigerian airlines night flights – NCAA

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Safety concern is a major reason domestic airlines in Nigeria are not allowed to operate night flights, Director-General of the Nigerian Civil Aviation Authority (NCAA), Captain Musa Nuhu, has said.

This came amid reports that Nigerian airlines lose at least N4.3bn annually due to the inability of most airports to operate for 24 hours.

The DG, represented by the Director of Airports and Aerodrome Standard, Capt. Tayib Odunowo, spoke at the 26th conference of League of Airports and Aviation Correspondents held in Lagos, with the theme: “Sunset Airports: Economic and Safety Implications.”

Some of the challenges he itemised militating against 24-hour operation are inadequate infrastructure; airports poor financial outlays; security risks and threats; inadequate airport and ANS infrastructure; traffic level; airline capacity among others.

He disclosed that Nigeria would need over N1.5 trillion or $5 billion to fix the airport infrastructure gap in the country.

He said, “There are issues involving fire cover, primary and secondary power sources, provision of communication, navigation and surveillance aids, automatic weather stations and now-casting equipment among others.

He however said the challenges can be addressed by developing Air Navigation Services (ANS); Airport infrastructure; developing Ancillary Infrastructure; Aerotropolis and others.

He noted that maintenance and service delivery at many airports in Nigeria are still seen as a great disincentive to travelling and tourism, advising that a lot needs to be done to make the airports economic tools for Nigeria’s development.

The Chief Operating Officer (COO), Ibom Air, Mr George Uriesi, stated that airlines are bleeding because of lack of 24 hours flight operations to major routes in Nigeria.

In his presentation on “Maximising Runway Utilisation: A Nigerian Airline Perspective,” he disclosed that the country’s carriers are losing an average of N4 million per flight, N12 million in every flight, N360 million in 90 flights and N4.3 billion annually on every flight to sunset airport operations.

He said while aircraft are designed to operate for 24 hours, they are underutilised because of the operational restriction caused by the absence of required facilities to operate for 24 hours at most airports in Nigeria.

To address the problem, Uriesi appealed to the government to prioritise airfield infrastructure and provide the necessary Instrument Landing System (ILS) and accompanying accessories for every airport, while also keeping the aerodromes open to meet the needs of airlines and other users.

Kila called for resetting of the aviation industry by all players in the sector and the establishment of the Bank of Aviation, which would make it easier for airlines to access foreign exchange.

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Emirates to cut flights to Lagos over trapped $85m revenue

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Emirates Airlines has announced that it will cut its flight operations to Nigeria due to its inability to repatriate about $85 million trapped in the country.

The airline said this in a letter addressed to the Minister of Aviation, Hadi Sirika, dated July 22, 2020, and signed by Sheik Majid Al Mualla, Emirates airline’s divisional senior vice-president (DSVP), international affairs.

The reduction in its operations in Nigeria, according to Emirates, will take effect from August 15, 2022.

It said the flights would be reduced from 11 per week to seven per week at the Murtala Muhammed International Airport (MMIA).

It stated, “We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria.

“As of July 2022, Emirates has $85 million of funds awaiting repatriation from Nigeria. This figure has been rising by more than $10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and 5 to Abuja continue to accumulate.”

Emirates also said the money was urgently needed to meet its operational costs and maintain the commercial viability of its services to Nigeria.

Part of the statement read, “We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post-COVID-19 climate.

“Emirates did try to stem the losses by proposing to pay for fuel in Nigeria in Naira, which would have at least reduced one element of our ongoing costs, however, this request was denied by the supplier.

“This means that not only are Emirates’ revenues accumulating, we also have to send hard currency into Nigeria to sustain our own operation. “Meanwhile, our revenues are out of reach, and not even earning credit interest.

“Your Excellency, this is not a decision we have taken lightly. Indeed, we have made every effort to work with the Central Bank of Nigeria (CBN) to find a solution to this issue. Our Senior Vice-President met with the Deputy Governor of the CBN in May and followed up on the meeting by letter to the Governor himself the following month, however no positive response was received.

“Meetings were also held with Emirates’ own bank in Nigeria and in collaboration with IATA to discuss improving FX allocation, but with limited success. Despite our considerable efforts, the situation continues to deteriorate. We are now in the unfortunate position of having to cut flights, to mitigate against further losses going forward.”

It also said, “We are confident that your valuable involvement would make a real difference in improving this very difficult situation. Should there be any positive development in the coming days, we will, of course, re-evaluate this decision,” it said.

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