The Christmas period is a period for giving. It is just a show of giving back to society and, in most cases, it is not usually convenient to do so, but a period where the gains of the year are enough to give back a little to the society. Nigerian airlines have never been known to do so.
They have found it very inconvenient to do that. Promotional fares have disappeared from the airlines’ marketing strategy as they seem to lack creativity towards that. Back in the day, airlines churned out promotional fares to woo customers and that brought a high level of competition to the market.
Fare cut
The Managing Director of Aero Contractors, Capt Ado Sanusi, at a press briefing last week Tuesday, while announcing the offer of N80,000 fares for an hour flight, said: “We have also studied the economic situation of the country. We are not insensitive to the economic hardship that is going on. And in the spirit of Christmas, which is the spirit of giving, we have decided to reduce our prices.
“We are still going to be profitable. We are not reducing our prices where we would not be profitable. Everywhere in the world you see there are Christmas sales, there are summer sales. There are sales during holidays. The reason is to give back to your customers, to your loyal customers. I believe we should start doing that. We do not intend to increase capacity. “Our customers are more important to us.
We must have a way of giving back. We don’t want to take advantage of them. Yes, I said if there is so much demand, you naturally increase the prices. But in this festive season of giving, I don’t think we should apply that economics. I think we should give back to the customers on their roads.” Aero’s gestures is that with proper economics, fares can still be relatively cheaper amid the taxes, charges and levies that have remained the same for over 20 years while other costs of jet fuel have remained stable for over a year.
The carrier is very strategic. A visit to the airline’s counters shows a beehive of activities to a relatively calm visit by passengers. A travel expert, who pleaded anonymity, described N80,000 as a promo fare, maybe with as little as six seats on each flight, that will attract consumers that probably wouldn’t have considered the airline. Everyone will look for Aero’s N80,000 fare and end up choosing N95, 000”.
Cartel
What many have discovered is that the domestic carriers in Nigeria have formed a dangerous cartel by engaging in what some persons termed ‘criminal price fixing’. Little over two years ago, airline operators rose from a meeting and declared that airfares would be N50,000 across board for an hour trip. Because the country lacked an anti-trust policy, the carriers had their ways unchallenged as they robustly defended their position. This singular action in a properly regulated aviation industry could have warranted a heavy fine or penalty from the regulatory body.
FCCPC intervention
In fairness, the Federal Competition and Consumer Protection Commission (FCCPC) led by its former boss, Tunde Irukera intervened, called out the carriers and threatened to fine the carriers.
The matter was later put to rest. That singular action never done in the country’s aviation industry could be likened to the £270 million slammed on British Airways in 2007 in a dual action by the United Kingdom and the United States competition authorities, after admitting price fixing on fuel surcharges on its longhaul flights. The Office of Fair Trading (OFT) fine is the biggest-ever penalty it has imposed on a company for infringements of competition law and demonstrated its determination to “deal vigorously” with anticompetitive behaviour.
The airline had admitted that, between August 2004 and January 2006, it colluded with Virgin Atlantic over the surcharges added to ticket prices in response to rising oil prices. During that period, the extra charges soared from £5 to £60 a ticket on long-haul return flights. It opens the way for passengers who believe they have been ripped off by BA to launch civil claims against the airline.
Weak oversight
It is not that airlines are excused from fare increases, a situation that made them sit at a roundtable and come up with the same fares for an hour’s trip can only be done in Nigeria where a weak aviation regulatory body looked the other way.
Stakeholders are of the view that the aviation regulations lack the willpower to call airlines to order in case of safety infractions, anti-consumer protection and, above all, the recklessness of many of these carriers to lord it over consumers without blinking an eye. The intervention of the Federal Competition and Consumer Protection Commission (FCCPC) in consumer protection matters has been the saving grace for consumers who are reeling under exploitative fare pricing in the aviation system.
It is agreed that airlines have continued to face herculean tasks in their operations such as getting loans at double-digit interest rates, which in the true sense is astronomical and highly untenable. Aircraft lease rental has equally gone high as a result of a red tag of the country on airline business including insurance premium.
That does not still distract from the fact that so many people consider over N300,000 for a one-way ticket to many parts of the South East and South-South, especially during the Yuletide as wicked and unconscionable; a situation that forced the FCCPC to investigate some firms including Air Peace amid uproar against the carrier’s fares.
Air Peace’s defence
But the Chief Executive Officer of the airline, Toyin Olajide, has defended his carrier, dismissing insinuation that Air Peace is charging exorbitant fares. Olajide at a press briefing last week said it cost the airline N7 million on fuel for one one-hour flight, adding that the airline pays over $4000 on Aircraft Crew Maintenance and Insurance (ACMI) on some of its leased aircraft.
Olajide briefed the media amid tension generated by the FCCPC investigation over what it termed exploitation by the carrier. Experts wonder why Air Peace particularly should engage in an expensive wet lease if its claim of over 30 aircraft is to be believed. There are indications that the carrier’s operating aircraft may be far less than the 30 airplanes it brandishes.
Airline under investigation
Air Peace, according to the commission, is under investigation for allegations of exploitative ticket pricing, including significant price hikes for bookings on specific domestic routes. It also emphasised the commission’s commitment to protecting consumer interests across critical sectors of the economy. A former Rector of the Nigerian College of Aviation Technology (NCAT), Capt Sam Caulcrick said the NCAA did not have the power to enforce anti-trust issues, even in its industry, adding that responsibility fell on the FCCPC, which is the reason the NCAA has it as a unit and not its core responsibility.
Last line
No matter our emotions, the role of an antitrust organisation like the FCCPC is needed for the survival of every industry, including the aviation industry. While Aero may have pulled a smart marketing strategy to draw attention to it, it shows that given all the indices, airlines are becoming a huge cartel run by a few individuals by taking advantage of lax in passenger protection.
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