By Derrick Bangura

The Federal Competition and Consumer Protection Commission (FCCPC) of Nigeria issued an interim order on Wednesday prohibiting scheduled domestic airline operators from “any increase in airfares and or any conduct not necessarily directly in compliance, but in response to changes in the market on account of a compliance by others,” pending the outcome of the commission’s investigation.

Mr. Babatunde Irukera, Executive Vice Chairman/Chief Executive of the FCCPC, stated that while the investigation was in its early stages, there was sufficient probable cause to proceed and provide interim measures to restore a free and undistorted domestic aviation market.
By the interim order, the operators are required to normalize prices to their prior state before the recent increment.

He said the commission was in addition to engaging the relevant stakeholders also entering and dispatching interim orders under Sections 17(a),(e),(l),(s),18(3)(a), 157, and 158 of the FCCP Act “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 Airline Operators of Nigeria (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 a compliance by others”.

The commission, in a statement signed by Irukera, further enjoined scheduled domestic airline operators to ensure strict and prompt compliance with the order.

He said, a preliminary investigation by the commission had established that the AON held meetings on February 8, 17, and 23, 2022, where decisions to increase airfares were deliberated in violation of guiding regulation.

He added the instances of price-fixing denotes anti-competition and against FCCPA.

According to him, “The investigation also confirms that one of the items of discussion during at least one of those meetings was to set base or minimum airfares. The Commission’s understanding from intelligence so far gathered is that there was significant controversy and or an initial lack of consensus with respect to coordinated conduct resulting in setting airfares.

“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.

“The Commission’s understanding from the deliberations at the meeting is that the attendees engaged in mutual discussions and exchange of their respective revenue management models or other commercially sensitive information.”

Continuing, the FCCPC boss said, “The FCCPA prohibits conduct or any coordination between competitors including on the platform of trade associations. Specifically, Section 107 (1)(a) forbids competitors from fixing prices, and 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 a cartel) is an unambiguous infringement of the FCCPA.

“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. Specifically, Air Peace, Azman Air, and United Nigeria Airlines immediately proceeded with the increase. Arik followed.

“However, on Friday, February 18, 2022, at 6:31 p.m. Aero Contractors informed its trade partners (travel agents) and its commercial executive team by email that ticket fares were reviewed effective February 18, 2022, with the least fare being N50,000 across all routes. Aero Contractors noted in this communication that all other airlines have effected the same increase.

“Within days, Max Air also increased fares to the same minimum N50,000. Ibom Air and Dana approximately 48 hours after what appears to be the initially coordinated conduct, also increased fares although not to the purported N50,000 minimum.”