Airfare increase: FG probes domestic airlines

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.”