By Chinelo Obogo
The aviation industry is embroiled in a heated debate as the Federal Competition and Consumer Protection Commission (FCCPC) insists on investigating Air Peace’s business practices, specifically focusing on allegations of exploitative fares (price gouging).
The scrutiny has ignited a firestorm of controversy, with stakeholders sharply divided over the commission’s role in the aviation sector.
At the heart of the dispute lies the question of whether the FCCPC is overstepping its authority by interfering in matters traditionally overseen by the Nigerian Civil Aviation Authority (NCAA), the designated regulatory body for the aviation industry.
While the FCCPC maintains that its mandate extends to consumer protection across all sectors, including aviation, critics argue that such intervention could lead to regulatory overlap and potential conflicts with the NCAA’s established role.
The beginning
The FCCPC had on December 3, released a statement saying that it was probing the activities of MTN, GTB and Air Peace after it received complaints about the ‘exploitative practices’ of these three companies. Shortly afterward, the management of the airline honoured the invitation of the commission as stakeholders hoped that the issues raised by the commission would be resolved.
However, on December 5, the commission released a second statement saying the inquiry was still ongoing and that the public should be wary of ‘manufactured news’. “The report claiming that Air Peace was not under investigation was not disseminated through our official communication platforms,” the FCCPC said.
The insistence by the commission that Air Peace was under investigation escalated tensions between both organisations, prompting the airline to hold a press conference on December 6 in Lagos, where it denied the allegations of exploitative fares and accused the commission of sabotaging its expansion opportunities. The airline’s Chief Operating Officer, Tolyin Olajide, said no domestic airline in Nigeria can be accused of exploitative fares as the cost of flight tickets is far below the cost of operations. She said operating a one-hour flight costs Air Peace approximately N20 million and that aviation fuel, at N1,400 per liter, constitutes 60-65% of operational costs, with the airline spending N7 million on fuel alone for a one-hour flight. She also said that Aircraft Crew Maintenance and Insurance (ACMI) costs $4,000 per hour, while insurance costs an extra N5 million per flight.
“We have a more difficult business environment than foreign airlines despite the fact that we are flying the same aircraft and buying the same spare parts, yet we bear these disproportionate financial burdens,” she said.
The accusations leveled against the commission by Air Peace may have enraged it further because, on December 8, the FCCPC’s Director of Corporate Affairs, Ondaje Ijagwu, released a third statement, warning the airline against obstructing the investigation, saying that the inquiry into its practices was prompted by a large number of complaints from passengers about unfair pricing, flight cancellations, and delays. But the airline said that only the NCAA has the authority to investigate its practices, an argument that the FCCPC dismissed as a misunderstanding of the legalities surrounding consumer rights, insisting that the commission has the legal mandate to investigate pricing and other consumer-related issues in all sectors, including aviation.
The commission pointed to section 17(e) of the FCCPA 2018, which gives it the authority to conduct inquiries when necessary or desirable in connection with any matter falling under its purview. It also cited section 127(1)(a) of the FCCPA, which empowers it to ensure that pricing practices across all sectors, including aviation, are fair and non-exploitative. Another section it used in its defense is section 148(3)(c) of the Act, which allows it to initiate inquiries based on consumer complaints.
The FCCPC claimed that Air Peace proposed an increase in fares ranging from NGN500,000 to N700,000 for a one-hour domestic flight, citing high fuel costs, but many passengers countered the airline’s claims, saying the figures were inflated. “At the proposed N500,000 fare, a Boeing 737-500 would be fetching a whopping N60 million per one-hour service. No amount of blackmail or cowboy tactics can stop the Commission from the ongoing thorough investigation of the allegations against Air Peace,” Ijagwu said.
Stakeholders’ positions
The National Association of Nigeria Travel Agencies (NANTA) was the first to come out strongly in defense of the FCCPC. NANTA’s president, Yinka Folami, said in a statement that the FCCPC has a mandate to conduct surveillance and investigation.
He said, “Our local airline players refer to the global pricing structure only when it is convenient. For example, our experience with global pricing is that you can purchase in advance. What happens in our domestic routes pricing/publication is that you cannot purchase three months in advance. Since September 2024, it has been practically impossible to purchase December 2024 tickets on lower classes/fares. Initially, fares were not displayed in advance (contrary to global practice), and when they were displayed, all lower classes, particularly to a particular region in Nigeria, were frozen.
“All you can buy is just one class (highest price class). This, in our view, is arbitrary and validates the FCCPC’s suspicion of discriminatory pricing. It also runs in conflict with our professional teachings that airline pricing is predominantly determined by flown mileage. We support the protection of consumer rights against anti-consumer services and discriminatory pricing, extension of inquiry beyond just one airline, inquiry into the arbitrary pricing structure of airfares in our market (both domestic and international). There should be an inquiry into significant delays, cancellations, and poor customer care to the Nigerian traveler. There should also be an inquiry into cross-border trading, which is price discriminatory to our market, circumventing, and extractive to our national economy.”
But the CEO of Top Brass Aviation, Roland Iyayi, defended the airline, telling Daily Sun that the FCCPC does not have the powers to go into the ticket pricing of any airline because the market has been deregulated, which means that anyone can charge what they wish. Iyayi said the Commission doesn’t have the powers to investigate predatory prices, as such powers rest with the NCAA and it is when the NCAA decides to escalate that the FCCPC can come in.
“There has been a running battle between the FCCPC and the NCAA, and that is why we have a consumer protection unit within the NCAA. Even the FCCPC has a director who used to be in the NCAA, and he should be able to advise them. They should not usurp the functions of the NCAA. If they receive any complaints, they should redirect to the regulator, and if the NCAA refuses to address the issue, they can now escalate.
“You cannot charge what we call ‘predatory pricing’, which is what you do when you charge below your cost, and what that does is it destroys your competition. If that was what Air Peace is doing, then the FCCPC has a right to come in and ask why they are doing what they are doing because what it means is that the airline would be trying to kill off competition, and that is the only time they have the power to investigate or to inquire,” Iyayi said.
An aviation expert, Amos Akpan, is also of the view that the FCCPC may be overstepping its bounds.
He told Daily Sun that the airline’s pricing system is not exploitative but complex, and if you don’t know the ‘how’ and the ‘why’, you are likely to assume wrongly. He acknowledged that even though the FCCPC has a difficult job, they must appreciate the need to be cautious in regulating a technical industry where practices and procedures are globally unified.
“It is difficult to plan and execute business plans in Nigeria where price change and policy somersaults are constant. Nigerian airlines have paid naira to purchase forex but are yet to get it, and as a result, most of their planes are grounded, and their services are disrupted. FCCPC will not get desired results if they ignore industry inputs while carrying out their functions. There was a need for them to get the relevant information from the NCAA, so they will be sufficiently armed with information to explain before going public.
“All parties should stop going public on this issue. Take time to gather information about all the inputs to the production of flight services in Nigeria. There is a cost to produce a seat on a flight which is established, but there is also a holistic approach to retaining the flight operations. The result will enlighten us, and we will be better informed. The ongoing press war confuses the less informed, and it is heating an already tense society.
“The NCAA has a Directorate of Air Transport Regulations. Under that is a department for economic regulations and monitoring. Under the same directorate is the department of consumer protection. These departments have sufficient information that, if FCCPC worked with NCAA, could have provided what they need to analyze the how and the why of any ticket fare of any Nigerian airline,” Akpan said.
As the investigation unfolds, the aviation industry watches with bated breath, eager to see how the regulatory clash will be resolved and what implications it may have for the future of the sector.