The director general of the Nigerian Civil Aviation Authority (NCAA), Capt Musa Nuhu, has said that airlines have the prerogative to reduce fares provided they have considered the economic implications of doing so.
Speaking in an interview in Lagos yesterday, Nuhu said he believed that any airline that slashed fares had done analysis before taking such decision.
“It is up to the airlines to do its finances and economics and determine a reduction of airfares and I believe these airlines have done their proper analyses to reduce the airfares. There are many factors; they only can explain the reasons behind their slashing of airfares.
“Maybe they have excess capacity and instead of leaving that…to go to waste they make some money out of it. So there are many reasons. Airlines may slash their fares maybe they want to relate to a particular market segment after which they will adjust their fares accordingly,” Nuhu stated.
On the assumption that when airlines reduce fares they may not break even and would therefore resort to cutting corners, the director general said it is the responsibility of the regulatory agency to “ensure they comply with all our standards and regulations.”
“I don’t think they will intentionally undercut themselves to the point they will not break even. I mean, let’s understand this. People have invested millions of dollars in their business. To me, it will be foolhardy to shoot yourself in the leg by cutting your airfares to the point that you are no longer profitable or cannot break even.
“So, it is the airline that can decide and know the internal workings, efficiencies and deficiencies that can really determine and explain the reduction in airfares.
“For us, if we see trends or indications of them trying to cut corners, then we will do a full economic audit of the airline.”
Commenting on the proposed audit by the International Civil Aviation Organisation (ICAO), the director general said: “We are working assiduously with all the agencies and the audit is about safety audit on the oversight function of the NCAA.
“So, when they come, they look through our books and see if our books are meeting ICAO standards and recommended practices, then they go into the industry, they go to NAMA, FAAN and go to any selected airline to see whether we are actually complying with what we have in our books.
“We have made significant progress and there is still some work to be done. We hope in a couple of months before the audit we will be fully ready.
“We have consultative meetings all the time with NAMA and FAAN. In NCAA we have our own internal meetings and this week, we are going to have a meeting with NAMA and NiMet on their preparations and we will have another meeting and feedback of progress before the end of the month (January).
“In February we will start with the industry, the private sector; we select the airlines and carry them along in our preparations.”
