Many airlines regard decartelization as the quickest route to bankruptcy. However, recent events have demonstrated how empty the objection to air competition is.
In recent weeks, airline companies have attempted to persuade passengers that the N50,000 basic cost for a one-hour flight was determined independently without colluding to fix fares. They denied ever convening a conference to select the appropriate airfare.
Many others were skeptical. They used expletives like 'collusion,' 'cartel,' and other expletives to describe the carrier's actions. They weren't convinced either because the new fares went into effect on the same day and virtually at the same time as the old ones.
Protections for consumers
The action also drew attention to the fact that the insistence of having a strong aviation regulatory body and other bodies to protect consumers and not to give powers to a collection of operators to take advantage of the situation to fix prices, a situation that has the tendency to kill competition and stifle the ability to allow market forces determine the price of goods and services.
The Nigerian Civil Aviation Authority (NCAA) may have gone to sleep by allowing airlines to hide under deregulation excuses to form a new cartel in the aviation industry.
However, even in a deregulated market, there is no reason why NCAA couldn't mandate that each carrier set its own price.
Given that the aviation business in Nigeria, like many others across the world, is unregulated, it is reasonable to have a legal authority to checkmate activities that are not only predatory, but also make a mockery of stringent rules.
The FCCPC rises to the challenge.
While the NCAA may have slept on calling the airlines to order over blatant cases of price-fixing, the Federal Competition and Consumer Protection Commission (FCCPC) has attributed the carriers' actions to price-fixing, claiming that detailed investigations by the Commission showed blatantly that they did so.
Mr. FCCPC's Executive Vice Chairman/Chief Executive, Mr. Babatunde Irukera, in a statement entitled: “Coordinated increase in airfares by certain scheduled domestic airline operators,” made available to New Telegraph, said FCCPA prohibited conduct or any coordination between competitors, including on the platform of trade associations.
Consequently, the Commission has asked all the airlines that colluded to raise airfares by 100 per cent to, in the interim, find urgent corrective actions required to restore free-market forces, The Commission encouraged Air Peace and other airlines to comply with its powers in a letter seen by our correspondent, which was issued to them.
It claimed that the airlines' activities had skewed the domestic aviation market considerably.
"Specifically, Section 107 (1)(a) prohibits rivals from fixing prices, and Section 108 outlaws any conspiracy, combination, agreement, or arrangement between competitors that unnecessarily restrains or injures competition," according to Irukera.
Infringement of one's rights
He further ruled that pricing coordination (also known as a cartel) was an unambiguous violation of the FCCPA, noting that regulation 18.15.2 I and (iii) of the Nigerian Civil Aviation Regulations (Air Transport Economic Regulations) clearly bans 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.
"The FCCPA, Civil Aviation Act, and their implementing rules support the right and prerogative of airlines (as other enterprises) to establish their fares autonomously, subject to, and in compliance with, prevailing law and applicable processes," he says. However, current legislation clearly prohibits rivals from coordinating, agreeing, or cooperating in the fixing of fares."
Nigerian airlines had previously struggled to agree on a standard rate policy for numerous routes, but they have generally able to reach an agreement, leaving travelers with a uniform fare structure.
Travelers may be perplexed by the pricing and service options available, but competition has helped to fill empty seats and reduce rates.
