Fare hike: Airline operators defy FG’s directive
…As operators deny receiving reversal order
…Increasing price of Jet A1 responsible for new payment — President, ATSSSAN
…Directive detrimental to safety of Aviation sector — Ojikutu
By Uthman Salami, Seun Ibiyemi, Ariemu Ogaga, Dennis Matthew
Airline Operators in the country have continued to work against federal government’s directive to revert the 100% increment in the price of Airfare to its previous level.
However, Operators who spoke with Nigerian NewsDirect on condition of anonymity told our correspondents that they were yet to be served any directive by the Ministry of Aviation or the Nigerian Civil Aviation Authority (NCAA).
They also stated that if such directive were to be in effect, the NCAA would have issued a memo directing all operators to revert the new fare across all routes.
Recall that domestic airline operators had resolved to increase airfares by 100 per cent with effect from March 1.
The resolution for the increment was adopted by all the domestic operators that pegged the least economy ticket at N50,000.
Meanwhile, the National President of Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), Comrade Danjuma Ahmed affirmed that the new payment policy was jointly accepted by all Airline Operators in the country after a meeting earlier.
Speaking with our correspondents, Comrade Ahmed said the new price is not unconnected to ceaseless increase in Aviation fuel, otherwise known as, JET A1.
On his part, the National Treasurer of National Association of Nigeria Travel Agencies (NANTA), Dr. Dagunduro Olatokunbo emphasised that the issue surrounding airfare hike shouldn’t be blamed on the airlines operators but the federal government.
He said the Federal government should do the needful by ensuring the availability of the JET A1 fuel for the Sector.
According to him, “The recent 100 per cent increment on airfares by domestic airlines is worrisome but they are in business as our partners and will readjust their tickets because of the scarcity of JET A1.
He stressed that the Nigerian Civil Aviation Authority (NCAA) is on top of the situation in the aviation Sector because it’s discouraging and affecting “our businesses as air travellers are opting to travel by roads despite the insecurity phenomenon in the country.”
Dr. Olatokunbo stressed that the federal government and the airlines operators of Nigeria should have a roundtable dialogue to fine-tune solution to aviation fuel scarcity not given order on reversal of hike in airfares.
On whether FCCPC had power to issue such an order, an Aviation Expert and Group Captain (Rtd), John Ojikutu said he doubted the power of the Commission saying that it does not make economic sense for Nigeria airline operatives to reverse air fare increment.
Mr John faulted the authority of FCCPC to issue, noting that such directive was detrimental to the safety of the aviation sector.
According to him, “I don’t think the FCCPC has that authority because it does not regulate the health or safety of the airlines operations.
“Wherever the FCCPC derived that authority from should be checked alongside the safety regulations, maintenance regulations and the operational costs of the airlines.
“Except the FCCPC is planning with the airlines for government intervention funds we are heading to a worst time in the commercial aviation than we were in 2010/2012.
“He who has ears to hear now what the global economy and commercial aviation is saying to the stakeholders.
“What the aviation industry is going through today is a long time of neglects of the oversight of the economic regulations of the sector as well as the neglects on the commercial earnings and financial health of the airlines.”
Ojikutu offered that the repair of the pipeline that supply fuel from Ejigbo to the MMA fuel depots as possible solution.
He said, “Solution is to repair the pipeline that supplies fuel from Ejigbo to the MMA fuel depots and extend it to the aprons hydrants. This will reduce the airlines’ operational costs by minimum 20%.
“This cost includes the costs of transportation by trucking and the cost of demurrage for the period of waiting before discharge. Secondly, I have asked many times that as the foreign airlines squeeze their earnings through our CBN to their countries, do the Nigerian airlines do same with their foreign earnings on tickets sold?
“The commercial oversight by the NCAA and the FIRS should begin to monitor the foreign earnings of the operators in the industry and that would include the FAAN, NCAA and NAMA.
“The questions that should readily come to our minds are; what happens to the $100/pax or the dollars fees paid for landing and parking by foreign airlines? What happens to the NCAA charges on foreign airlines tickets, etc? What happens to same charges by NAMA on foreign airlines or the charges by the fuel marketers and the ground handling services companies?
“The totality of all these foreign earnings is huge and can save the industry at a time like this.
“All foreign earnings from charges on services to foreign airlines by operators in the sector must be domiciled in the CBN and naira equivalent given to the depositor. The depositor can return the naira at an appropriate time when the foreign currency is needed by that must be approved by an appropriate authority. This will reduce the incessant demands by operators for unnecessary forex.
“We have seen a lot of leakages, wastes and their neglects in the earnings of the operators that have resulted several times into asking or approving intervention funds for these operators from the scarcity of funds for other critical social needs.
“We are witnessing today such intervention in the monthly allocation of N50billion to the DisCos that should be making over N2 trillion from 10 million consumers but reporting less than N800billion; we are seeing what is happening with the NNPC that needs now N251 billion to clean the mess of imported adulterated fuel; these are many escalated spending requests going on now in the media; all these are coming on the heels of our journey towards the 2023 election year.
“The neglect of regulating the commercial health of the airlines over the years have caught up with everyone and stakeholders in particular in the race to 2023.
“The attempt by the FCCPC to stop the airlines from increasing tickets fares and the silence of the NCAA could be a clever way to draw attention of our government to the needs to give the airlines operators another intervention funds to avoid any eventual ‘tools down’ by the airlines and disruption of the campaign train of the political class that will be greatly affected.”
Last week, the Federal Competition and Consumer Protection Commission (FCCPC) had ordered airline operators to immediately stop the current implementation of airfare increase until the outcome of the its investigation.
The interim order, according to the Commission, was in line with Sections 17(a),(e),(l),(s),18(3)(a), 157 and 158 of the FCCPAct.
The Commission had said credible information revealed that while attendees at the meeting did not arrive at a consensus, the meeting ended in a resolution that encouraged or consented to the coordinated conduct.
The Commission said it frowned at conduct or any coordination between competitors including on the platform of trade associations.
According to the Commission, “Specifically, Section 107 (1)(a) forbids competitors from fixing prices, while 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.
“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.
“This includes directly or indirectly fixing a charge, fee, rate, fare or tariff and any collusive action.
“The commission in addition to engaging the relevant stakeholders is 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.
“Regarding any increase in air fares and or any conduct not necessarily directly in compliance, but in response to changes in the market on account of a compliance by others.”
As at the time of filing this report, effort to reach NCAA proved abortive as the Authority’s phone was not available.
