‘It’s against the law’ — FCCPC orders airlines to suspend ‘coordinated’ airfare hike

The Federal Competition and Consumer Protection Commission (FCCPC) has issued an interim order prohibiting the sudden hike in the price of airfares by domestic airlines.

In a statement on Wednesday, Babatunde Irukera, executive vice-chairman of FCCPC, said the order would remain in place pending the outcome of its investigation into the matter.

Nigerian airlines had recently increased the cost of economy flight tickets for domestic routes from about N35,000 to a base fare of N50,000.

The FCCPC attributed the action of the carriers under the aegis of the Airline Operators of Nigeria (AON) to price-fixing, saying detailed investigations by the commission showed that the airlines’ move was “coordinated”.

It reminded the airlines that the FCCPA Act 2018 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,” the statement reads.

The commission added that coordination in increasing prices (otherwise known as a cartel) is an unambiguous infringement of the FCCPA.

It further stated that 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 which includes directly or indirectly fixing a charge, fee, rate, fare or tariff and any collusive action”.

According to him, the FCCPA, Civil Aviation Act and implementing regulations of both legislations respect the right and prerogative of airlines (as other businesses) to set their fares independently subject to and in accordance with prevailing law and applicable processes.

He, however, said the “prevailing law expressly prohibits coordination, agreement or cooperation between competitors in setting fares”.

He said the commission and the Nigerian Civil Aviation Authority (NCAA) had commenced investigations into the matter.

He said that although the investigation is at early stages, there is sufficient probable cause to proceed and also provide interim measures to restore a free and undistorted domestic aviation market.

“In the circumstances, the Commission is in addition to engaging the relevant stakeholders 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 of the 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 compliance by others,” the statement adds.

“The Commission enjoins scheduled domestic airline operators to ensure strict and prompt compliance with the Interim Order pending the outcome of the commission’s investigation.”