Keyamo seeks FCCPC-NCAA regulatory collaboration amid controversial Air Peace pricing methodology

Onome Amuge 

Festus Keyamo, Nigeria’s minister of aviation and aerospace development, has called for improved coordination between the Federal Competition and Consumer Protection Commission (FCCPC) and the Nigerian Civil Aviation Authority (NCAA) to address the lingering dispute over alleged price gouging in the airline industry.

Keyamo criticised the FCCPC’s recent public statement on Air Peace’s pricing methodology, asserting that the commission have reached out to the Nigerian Civil Aviation Authority (NCAA) privately, rather than issuing a public statement.

The development comes in the wake of an invitation  by the FCCPC which was honoured during the weekend by Air Peace executives to address allegations of price gouging and poor service delivery.

The FCCPC, during the meeting,  cautioned Air Peace against interfering with its ongoing investigation into the airline’s pricing practices.

The commission raised concerns that Air Peace had allegedly been inciting other domestic airlines to hike their fares, potentially impacting the domestic air travel market. 

In addition, the commission stated that it had received reports from some petitioners claiming that Air Peace had arbitrarily cancelled flights without providing adequate care or compensation to affected passengers.

In response to the FCCPC’s statement, Keyamo expressed disappointment with the commission’s handling of the issue.

The minister, in an interview with Arise News on Sunday, criticised the FCCPC for its approach in questioning Air Peace’s pricing methodology. 

He stated that the commission should have first reached out to the Nigerian Civil Aviation Authority directly instead of issuing a public statement.

The minister said, “I think it was a very careless statement – I say that with all apology – by the agency, making such a statement without consulting the core agency involved in regulation, which is the NCAA. The power to regulate these airlines and for the airlines to inform about their price increase and all of that is domiciled in NCAA; that is the core agency.

“They should have contacted the NCAA for them to look at the books, which we have been doing, so we would have given them facts. But to single out a few airlines that we are struggling to expose to the world for them to get more enhanced capacity, it was a bit careless.” 

Keyamo, in his  explanation of the real issue at the heart of the problem, stressed that the airline industry’s capacity limitations were to blame for the current situation, not exploitation.

The minister highlighted the challenges facing the aviation industry, including the difficulty in acquiring new aircraft and servicing routes, as well as the volatility of foreign exchange rates that significantly impact the cost of operations, noting that “everything in aviation is dollar based.”

According to him, Nigerian airlines spend majorly foreign exchange due to their need to hire aircraft, which he referred to as wet leasing.

He explained further, “All of these are foreign exchange, and with the fluctuating nature of our naira against the dollar, you will expect that it will affect also their cost of operation. Now, what we are therefore doing is to ensure that we expose them to the markets across the world where they can now access aircraft on very good terms, and this will impact on the prices of tickets and their cost of operation. 

“That is what led us to addressing the issue of the practice direction pursuant to the Cape Town Convention. That is the core of the problem of the aviation industry that this president and vice president graciously supported us to get to, and we are there now.” 

As a potential solution to the current challenges facing the aviation industry, Keyamo revealed that he will be leading a Nigerian delegation to Dublin in January to engage with major airline financiers.

The purpose of this meeting, the minister stated, is to explore opportunities for accessing aircraft at more favourable rates, which he believes will ultimately result in lower ticket prices and reduced operational costs.

“All the major airline financiers, aircraft financiers, and liaisons, are all gathered there (in Dublin), and for the first time, they have invited Nigeria to say, because of what we have done, because of the fact that all these efforts we have made to make them access these markets around the world, has increased our compliance score from 49% to 75.5% for the first time in history, all credit to the policies of President Bola Ahmed Tinubu,” he said.

Prior to the recent development, reports had surfaced a week earlier about the FCCPC launching an investigation into widespread complaints against Air Peace, seeking to address issues related to poor service delivery, exploitation of consumers, and potential violation of consumer rights.

Following a meeting between FCCPC and Air Peace in Abuja, a subsequent report by the FCCPC stated that the inquiry was indeed underway, despite earlier claims to the contrary.

In response to FCCPC’s public statements and allegations against Air Peace, Oluwatoyin Olajide, the chief operating officer, Air Peace, in a statement, expressed disappointment at FCCPC’s actions and noted that the issue had been escalated to the Presidency for resolution.

Olajide also questioned the basis of FCCPC’s assertions that Air Peace was charging exploitative fares.

The Air Peace COO alleged that the FCCPC doesn’t understand the magnitude of damage they have done to Nigeria. 

“We cannot allow this same airline that has rescued us to be pulled down. Today we have other African carriers that come to Nigeria and are charging very high fares. Other countries are begging us to come to their country. What we are charging today is still below what our counterparts with better conditions are charging,” Olajide stated.

“Before you say an airline is exploiting passengers, you must be able to prove it. How do you come about that? There are operating costs on a flight. We buy fuel at almost 1,400 per litre. To operate one hour flight, it will take an average airline 4,000 litres of fuel. Fuel alone cost N7 million on a one hour flight,” she added.

Olajide further explained that it costs $4,000 to operate an aircraft for a one-hour flight including crew, maintenance and insurance, adding that insurance costs three times more than it costs in other climes because Nigeria is stigmatised.

Meanwhile, Ondaje Ijagwu, the director of corporate affairs at FCCPC, in a statement titled, “Consumer Rights Violation: FCCPC cautions Air Peace against obstructing inquiry”, cautioned  Air Peace against obstructing the commission’s inquiry.

Ijagwu stated that the issues raised against the airline were of great importance, and as such, the commission had a duty to investigate them thoroughly.

The FCCPC argued, “As stipulated in Section 17(e) of the FCCPA 2018, the FCCPC is mandated to carry out inquiries considered necessary or desirable in connection with any matter falling within the purview of the Act. Furthermore, Section 127(1)(a) empowers the FCCPC to ensure that pricing practices across all sectors, including aviation, are fair, competitive, and non-exploitative. Specifically, it states that no undertaking shall offer to supply, supply, or enter into an agreement to supply goods or services at a price or on terms that are manifestly unfair, unreasonable, or unjust.

“Pursuant to Section 148(3)(c) of the FCCPA 2018, the FCCPC, upon receipt of a consumer complaint, can direct an inspector to institute an inquiry and investigate the matter as quickly as practicable to determine whether the undertaking has acted inconsistently with the provisions of the Act.

“The inquiry into Air Peace’s pricing practices stems from allegations of unjustified fare increases on advance bookings for certain domestic routes, lack of transparency in pricing structures and practices that potentially contravene consumer rights and fair competition principles.”