The Federal Competition and Consumer Protection Commission (FCCPC) has issued interim order to domestic airlines to desist from charging air travellers their recent hike in fares pending when it concludes investigation into the matter.
It reminded the airlines that the Federal Competition and Consumer Protection Act, 2018 (FCCPA) prohibits conduct or any coordination between competitors including on the platform of trade associations, stressing that “coordination in increasing prices (otherwise known as cartel) is an unambiguous infringement of the FCCPA.”
As a result of this, the Commission said, “In the circumstances, the Commission is in addition to engaging the relevant stakeholders 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 of the AON or its members 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.
“The Commission enjoins scheduled domestic airline operators to ensure strict and prompt compliance with the Interim Order pending the outcome of the Commission’s investigation.”
The interim order is contained in a press statement issued Wednesday in Abuja by Babatunde Irukera, Executive Vice Chairman/Chief Executive of the FCCPC.
The Executive Vice Chairman/Chief Executive of the FCCPC noted that the Commission with the collaboration of the Nigerian Civil Aviation Authority (NCAA) has commenced an investigation with respect to the subject, and stressed that although the investigation is at early stages, there is sufficient probable cause to proceed and also provide interim measures to restore a free and undistorted domestic aviation market.
He pointed out 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.
However, he said the “prevailing law expressly prohibits coordination, agreement or cooperation between competitors in setting fares.”
Irukera further stressed 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.”
He explained that on Sunday, February 20, 2022, the Commission became aware that domestic airlines purportedly under the aegis of the Airline Operators of Nigeria (AON) (a trade association for domestic airlines under the Federal Competition and Consumer Protection Act, 2018 (FCCPA)) “after a series of meetings over a period of three weeks including on Thursday, February 17, 2022, and Saturday, February 19, 2022, in supposedly association meetings discussed multiple industry-wide issues; particularly challenges experienced by AON members.”
Some subjects of the discussions included foreign exchange, cost of ground handling services, the rising cost of jet fuel and airfares.
According to Irukera, the Commission’s preliminary investigation discloses confirms that one of the items of discussion during at least one of those meetings was to set base or minimum airfares., and that “there was significant controversy and or an initial lack of consensus with respect to coordinated conduct resulting in setting airfares.”
He emphasised that the “Commission also has credible information that while attendees at the meeting may not have arrived at a consensus, the meeting ended in a resolution that encouraged, permitted or consented to the coordinated conduct.
“In furtherance of the discussions and or resolution at the meeting, certain champions of the coordinated conduct of imposing a base fare or a Minimum Re-Sale Price (MRSP) for their services in a coordinated and contemporaneous manner proceeded to increase their fares to a minimum of N50,000 across all sectors.”
The FCCPC boss maintained that his action regarding coordinated increase in airfares by certain scheduled domestic airline operators is pursuant to “Sections 17(a),(e),(l),(s),18(3)(a), 107(1)(a), 108, 157 and 158 of the Federal Competition and Consumer Protection Act, 2018; Regulation 18.15.2 of the Nigerian Civil Aviation Regulations (Air Transport Economic Regulations), 2015.”