FCCPC queries Air Peace’s proposed N500,000 domestic fare

…Cautions airline against obstructing inquiry

The Federal Competition and Consumer Protection Commission (FCCPC) has raised concerns over Air Peace’s justification of its proposed N500,000 fare for a one-hour domestic flight in Nigeria.

The Commission is currently investigating allegations of exploitative pricing, lack of transparency, and other practices potentially violating consumer rights and fair competition laws.

Earlier on Friday, the FCCPC criticized Air Peace’s recent public remarks, describing them as attempts to distract from the ongoing inquiry. This followed a December 3 meeting at the Commission’s Abuja headquarters, where Air Peace executives were engaged regarding a surge of passenger complaints.

Also, in a statement issued on Sunday, signed by Ondaje Ijagwu, director of corporate affairs, the commission noted that central to the inquiry are allegations that Air Peace’s proposed pricing structure lacks justification.

The airline had claimed that operating costs, particularly jet fuel, warrant the increase, asserting that fueling an aircraft for a one-hour flight costs N7 million. Critics, however, point out discrepancies in these calculations, arguing that the average cost of fueling a Boeing 737-500, commonly used by Air Peace, is significantly lower.

The consumer protection commission argues that Air Peace’s current pricing at N200,000 per ticket already yields substantial revenue, and at N500,000, the airline could earn as much as N60 million per one-hour flight.

Compounding the controversy, competitors in the same sector have recently reduced fares on similar routes, offering tickets as low as N80,000. This move has raised questions about the affordability and sustainability of Air Peace’s pricing model as consumers have even speculated whether Air Peace sources its fuel at exorbitantly higher costs.

The FCCPC emphasised that the investigation remains ongoing and reiterated its mandate to protect consumers from unfair practices, as stipulated in the Federal Competition and Consumer Protection Act (FCCPA) 2018 as the commission has the authority to review pricing practices to ensure fairness and compliance across sectors, including aviation.

The controversy escalated when Air Peace held a press conference in Lagos, where the airline’s chairman, Allen Onyema, made bold claims, including a suggestion that the airline might shut down operations.

The FCCPC dismissed these remarks as diversionary and urged Air Peace to focus on addressing the allegations against it.

The Commission also refuted media reports suggesting Air Peace was not under investigation, clarifying that such statements did not originate from its official platforms. It cautioned the airline against obstructing the inquiry and reiterated its commitment to consumer protection.

With the investigation ongoing, the FCCPC has called on the public to disregard unverified reports and expressed its determination to ensure that Nigerian consumers are treated fairly in the aviation sector.

Read also: Air Peace vs FCCPC: Airline reports commission to presidency, questions criteria for investigation

“The Federal Competition and Consumer Protection Commission notes, with consternation, the latest outburst by Air Peace in what seems a series of ploys calculated to both obfuscate the issues and distract the Commission from the ongoing inquiry into alleged exploitative ticket pricing among other potential violations of consumers’ rights.

“Last Thursday, the Commission had to refute a report syndicated in a section of the media which grossly misrepresented the proceedings at a meeting between its officials and Air Peace team earlier on December 3 at the Commission’s Abuja headquarters, as a follow-up to an avalanche of petitions received from passengers in recent times.

“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.

“Even more disturbing was the assertion by Air Peace at the press conference that the sum of between N500,000 and N700,000 should be the ideal fare for a one-hour domestic flight in Nigeria. It claims it spends an average of N7m to fuel an aircraft for a one-hour flight. But some of the petitions by consumers before the Commission strongly contest such claims. The argument is made that the typical Boeing 737-500 flown by Air Peace takes N4m to fill a tank of 4,500-litre Jet A1 capacity. With a full load of 120 passengers by a Boeing 737-500 vessel, a whopping N24m is earned when a one-hour flight is sold at the current average of N200,000.

“At the N500,000 being proposed by Air Peace as the “most ideal fare”, it then means a Boeing 737-500 would be fetching a whopping N60m per one-hour service.

“Interestingly, at a time Air Peace proposes N500,000, another airline has reduced fare to N80,000 on not just one-hour Abuja-Lagos flight but also on other domestic routes, thereby demonstrating that affordability and operational sustainability can coexist in the same operating environment. That recent singular action by a competitor has led some petitioners to ask whether the fuel Air Peace uses is being imported from the United States at higher cost,” the statement reads

On his part, Festus Keyamo, minister of aviation and aerospace development, has criticised a recent statement by the Federal Competition and Consumer Protection Commission (FCCPC) on Air Peace’s airfares, describing it as “very careless”.

Speaking during an interview on ‘This Morning’ show on Arise News on Sunday, Keyamo said the commission should have consulted the Nigeria Civil Aviation Authority (NCAA), the core agency responsible for regulation, before making such comments.

“I think it was a very careless statement I say that with all apologies by the agency, without even consulting the core agency involved in regulation, which is the NCAA

“The powers to regulate for the airline to inform about their price increase and all that is domiciled in NCAA, that is the core agency,

“We cannot have an agency of government floating all over the place, having all the powers, that means if there’s a problem with yam pricing they will go and call the agricultural minister,

“I don’t think their powers are stretched to that point, but I say that with apologies because also I’m a minister of government.

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