Last Friday, the weather in Lagos was very hot and harsh. Also hot and furious was Mrs. Oluwatoyin Olajide, the Chief Operating Officer (COO) of Air Peace, Nigeria’s leading airline. As she walked in and sat down to address the press in her office in Ikeja GRA, her red lips appeared much redder. Dr. Allen Onyema, the Chairman of the company who sat beside her, looked even angrier. From the look of things, it was quite obvious that this toad did not decide to run in that hot daytime for nothing.
On the radar screen of Olajide and Onyema was the Federal Competition and Consumer Protection Commission (FCCPC). This commission has found no peace since it went public earlier this month with a letter it wrote to the authorities of Air Peace. The subject of the letter was an enquiry, or investigation if you like, on the alleged exploitative fare by the airline.
“These inquiries, being conducted under the Federal Competition and Consumer Protection Act (FCCPA) 2018, are focused on addressing poor service delivery, exploitative practices, and potential consumer rights violations. The inquiries are structured engagements aimed at ensuring compliance with regulatory standards, improving transparency, and protecting consumer interests,” the FCCPC had noted.
Hardly had this news broken when people who had tons of complaints against Nigeria’s largest airline shouted Eureka! This is not surprising. Being the ripest fruit in the aviation industry in Nigeria, Air Peace receives all sorts of stones thrown at it from the public from time to time. The airline stands accused of delays in scheduled flights and flight cancellations. It is said to have routinely charged unfair fare, especially to South-East destinations. In a festive season as we are now, the fare for a one-hour flight from Lagos to Enugu, for instance, could be higher than from Lagos to Maiduguri, which is a farther distance. I have been a victim of this phenomenon.
Last year, Air Peace management explained that the cost of air tickets was propelled by the principle of demand and supply. “Increased demand for flight tickets/high passenger traffic this season to these destinations automatically impact the way the aircraft seats get sold. The seats get sold out faster than some routes with less traffic. Therefore, the airline booking engine reservation system displays the higher fares faster even though eventually, the higher fares will get displayed on the less traffic routes as the seats get fuller, too,” it said. According to the airline, the fare system is automated such that as aircraft seats are filled, the higher fares get displayed automatically. And this applies to international flights as well.
It’s just like the exorbitant fare bus operators charge during festive season like Christmas. It is high because of the high passenger traffic to the eastern destinations. A bus that takes passengers down to the East from Lagos this season will likely come back to Lagos empty because there is little or no movement from the East to Lagos. Almost all movements are East-bound.
The airline industry is capital intensive and weathers through different storms to break even. Sometimes, a plane is grounded because of bird strike as happened to Max Air recently. Poor weather conditions could cause delays in flight schedules. Sometimes, flights are cancelled on account of this poor weather. And each time this happens, the airline loses a lot of revenue. The Nigerian Civil Aviation Authority (NCAA) is there to monitor and supervise the airlines. It knows when an airline is deviating and wields the big stick when that happens.
This is partly where the anger of Air Peace against FCCPC lies. The airline believes that the FCCPC should have conferred with the industry regulator, the NCAA, if there were issues it needed to get clarifications on. This is because it is the NCAA that understands the intricacies of running an airline.
For instance, Olajide said the cost of aviation fuel alone was N1,400 a litre. For a one-hour flight, a plane needs about 4,000 litres of fuel which cost about N7 million. Insurance costs about N5 million for the same one-hour flight, which is said to be more than three times higher than what obtains in many other countries. Additionally, the total cost of an Aircraft, Crew, Maintenance and Insurance (ACMI) lease agreement for some leased aircraft in its fleet runs into $4,000 per hour. Olajide believes if the airlines in Nigeria should charge fares commensurate with the cost of running aircraft, it will not be anything less than between N500,000 and N700,000 for a one-hour flight. But they still charge between N95,000 and N120, 000 for that and yet they are being persecuted.
Olajide lamented that the cost of borrowing was about 30 per cent in Nigeria whereas an American or United Kingdom carrier has access to a single-digit loan of about three per cent. “These are airlines operating the same kind of aircraft, burning the same amount of fuel. We also have to change the naira to dollars because every single item on a plane, you can’t buy it here,” she said.
Meanwhile, this is an airline that represented Nigeria well during the COVID-19 pandemic. It came to the rescue of Nigerians when they faced xenophobic attacks in South Africa. It also went to Sudan to rescue trapped Nigerians when nobody dared to visit that country. The entry of Air Peace into the United Kingdom in March this year reversed the exploitative fares Nigerians paid on London route.
The airline feels it deserves commendation rather than vilification for its efforts to put Nigeria on the world aviation map. It feels sad that its reputation has been severely damaged by the FCCPC investigation story. For instance, it applied for a slot to operate its summer flights in a particular country. The reply it got was that there was no slot for it because the airline was not that country’s priority.
If government agencies were transparent in their investigations, there would not be any problem at all. But sometimes, they present a façade of acting in public interest while they are actually looking for avenues to exploit these companies. Look at what transpired between Dangote Refinery and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) a few months ago. The government agency through its boss, Farouk Ahmed, accused Dangote Refinery of distributing substandard products in the country. It said the country would not stop fuel importation to avoid a monopoly in the sector by the Dangote Group. Even efforts by the refinery to obtain crude locally were frustrated.
Dangote could not allow his $20 billion investment to be rubbished in that manner. He was forced to talk the way he never did. He challenged the NMPDRA by conducting tests showing that the quality of his products was better than some imported samples. Even former President Olusegun Obasanjo waded in, saying some cabals were trying to frustrate Dangote. He recalled that he invited Shell to come and run our refineries for us when he was President. Shell refused to get involved, citing too much corruption in the way our refineries were maintained.
The story of Air Peace and Dangote is representative of what investors and businesses go through in the hands of some government officials in Nigeria. This is not to say that companies should not be investigated if there are genuine reasons to do that. The sad reality is that there are rackets in these government agencies operating for their own selfish interests. All they are after is how to extort these companies under the guise of enforcing certain rules. This is partly why we score low in the ease of doing business index.
The FCCPC should have quietly done its investigations without making it a media affair. It is after the investigations that it could go public with its findings to assuage the public. Curiously, some airlines charge higher fares than the accused airline. But they are not being investigated. It’s good that Air Peace has reported its case to the Presidency. I doubt if anything tangible will come out of this. Nevertheless, the Presidency should investigate the airline’s complaints and apportion blame and punishment where it is necessary. We cannot be looking for investors while the surviving businesses in the country are being browbeaten.
