The Federal Competition and Consumer Protection Commission (FCCPC) has explained the rationale behind its invitation saying it was meant to inquire and understand its price methodology and response to consumers’ complaints.
The director, surveillance and investigation, Mrs Boladale Adeyinka said neither the airline nor is chairman, Allen Onyema was under any investigation by the commission.
Instead, it invited Air Peace based on complaints from customers about the airline’s price methodology.
The airline said in a statement by its spokesman, Dr Ejike Ndiulo that the Adeyinka offered the explanation in Abuja when Onyema led some members of his management team to honour the invitation by the commission.
According to Ndiulo, the commission commended Air Peace for the insights made on its operations.
“We have gained more insight into your operations. Just again to reiterate that it is not an investigation, it is an enquiry to understand and again, find out based on consumer complaints.”
“Thank you also for bringing your expertise and insights to the industry, it is a good one for us, it is a good one for Nigerian consumers. This is our own; we are happy that you are doing well because if the consumers are saying that this is our aircraft, it means that ownership has moved from you to every Nigerian,” Adeyinka was quoted as saying.
She noted that the FCCPC exists for the good of businesses, customers and the operators, stressing that business stability and sustainability are core to its mandate.
“We will review the situation and intervene where we can, not just for Air Peace customers but generally for all air passengers and other consumers of aviation services. This is part of the commission’s efforts at bringing competitiveness in the market,” she said.
Earlier Onyema had explained that fare pricing in the aviation sector is a global thing but lamented that the fare regime in Nigeria is not commensurate to the cost of putting an aircraft in the air thereby causing many domestic carriers to fold up.
He said the choice before Nigerians, going forward, would be to choose between flying safe and sustainable of the airlines, which require proper pricing based on global standards or watch the airlines go under due to poor pricing.
“We need flight safety in Nigeria. For us at Air Peace, safety is a pre-condition rather than just a priority,” he noted.
Onyema explained that the cost of flying anywhere in the world is priced at between $250 to $300 for an hour and in some cases as high as $540, saying “this could pass for fair pricing, which Air Peace does not follow because of the low purchasing power of Nigerians.”
He added that the addictive nature of aviation business and patriotism kept him in the business, stressing that if the airline were to factor the numerous charges involved into its operational cost, not many Nigerians would afford to fly.
He stated that the high cost of interest on loans from banks ranging from 33 to 35 percent, high insurance cost put at about $12 million annually, an amount which could insure about eight aircraft abroad, volatility in the cost of aviation fuel, and other sundry charges and replacement of parts, which are all sourced in dollars, make airfare high.
Besides, he said it costs about $4,000 for landing per hour for an airbus aircraft, just as there is a cost for engine flight circle per hour.
He said costs if factored into operating cost will deny many of Nigerians the opportunity of flying.
“What happens abroad is far better but here, it is a different ball game. When you calculate all these costs, you will find out that when you fill your plane with passengers, you will still have not broken even, though 70% is given as the breakeven point because the fares are not just right,” Onyema added.
Furthermore, he said in other climes the cost of operations accounts for 40 per cent component of the business but regretted that the case is different in Nigeria as the cost is much higher, even up to 70 per cent.
