Businesses or governments often engage in practices that prevent, reduce, limit, restrict or eliminate competition in a market as they strive to gain advantages, whether fair or unfair, or dominate the market. The main goal of such practices is to enable dominant brands or products to attract supernormal profits and chase away competitors from the market. Anti-competitive practices often manifest in form of mergers, monopolies, group boycotts, cartels (oligopolies), price-fixing, price discrimination, exclusive contracts, collusions, predatory pricing (dumping), etc. Apple, Qualcomm, and other examples abound about brands allegedly caught in anti-competitive practices.
In the late 1990s, Microsoft got slammed with antitrust charges for bundling Internet Explorer with Windows.
This business move was seen as an attempt to stifle competition from other web browsers; and the company later settled with US Department of Justice in 2001. Google, on its part, was fined by the European Union over what was termed as favouring its own shopping service in search results, thereby promoting anti-competitive behaviour by stifling competition.
It often happens in somewhat lucrative businesses that contracts may be signed in such manners that a supplier agrees to supply only one customer, in a particular geographical location; and/or instances where a customer agrees to buy all component parts exclusively from a single supplier, a major distributor. Instances of this nature had led to various anti-trust laws to prohibit conspiracies that reasonably or unreasonably confine trades.
Notable among the anti-trust laws are the Sherman Antitrust Act which has provisions against agreements among competitors to fix prices or wages, bids rigging, allocating customers, workers, or markets; monopoly or conspiracy to monopolise, or making attempts to monopolize a market for products or services. Like it is the Clayton Act, a law that aims to promote fair competition and prevention of unfair business practices that could harm consumers by prohibiting actions that are capable of restricting or lessen competition, such as tying agreements (forcing customers to buy a product they don’t really need together with what they want to buy), predatory pricing (setting prices very low below costs to drive competitors out of market), and mergers.
It is this anti-competition practices in the aviation sector that is a huge challenge confronting Air Peace, a new entrant into the lucrative London-Lagos route. Heretofore, the international routes into and out of Nigeria had been the exclusive preserve of foreign airlines since the demise of the Nigeria Airways. It is as if there is an unwritten understanding that no local airline must succeed in their attempts to fly Nigerians in and out of the country despite how mobile and how smitten by foreign environment Nigerians are.
Notwithstanding the huge Nigerian aviation market, Nigeria’s government officials would rather go-a-begging the foreign airlines, whose own governments are protecting, nursing and nurturing, to treat Nigeria and Nigerians the way it pleases them and to do what they like with the Nigeria’s aviation market. One can name the Nigeria airline brands that had attempted the international routes and failed. Their misadventures not because they were neophytes, unserious and unready for the international routes but more for the harsh, annihilating competitions that confronted them.
Anti-competitive practices are not new to the aviation industry. According to airliners.net, many airlines use cutthroat tactics to combat rival airlines. Also, “airline competition can be subject to various types of barriers, two of which have recently attracted considerable attention from competition agencies and regulators: access to airport slots (structural barriers) and airlines’ loyalty and pricing strategies (strategic barriers)” says Organisation for Economic Co-operation and Development’s Directorate for Financial and Enterprise Affairs Competition Committee in the 2014 unclassified paper.
The paper goes further to reveal that, “predation through exclusionary pricing and selling strategies is one of the most commonly alleged abuses in the airline industry. The few enforcement decisions in the field, however, raise the question as to whether predation tests are well-suited to detect and assess airlines’ predatory strategies, such as price cuts or non-price instruments”.
Prior to the coming into the lucrative London-Lagos route, airlines that were plying the route were charging as high as N2.7 million on one-way economy ticket. In the piece I titled: “Japa: A Gleeful Saunter To Servitude Or A Strategic Move For Better Life (Part 1 & 2),” I wrote about the plight of Nigerians who were selling their properties to enable raise air fares to travel out of the country. In the two-part article, I revealed that Ademola sold his poultry business for N5 million in his attempt to raise N7.5 million airfare and Kelechi had to sell his three Toyota Sienna vehicles for N3 million each in his bid to raise additional N9 million to afford airfare to Canada.
This was the plight of Nigerians until Air Peace stepped into the London-Lagos route few weeks back. To respond to the airfare introduced by the airline, suddenly all existing airlines who have been milking Nigerians suddenly woke up to realise that they have been ripping Nigerians off with arbitrary fees and it is time to drastically bring down their own airfares to as low as N569,000.
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This is also coming at a time it is being reported that the Nigerian brand is not getting a warm services at the London airport. We are not at a loss to the game at play here. Nigeria’s aviation industry officials and the federal government need to be alive to their responsibilities to ensure that the Nigerian brands are well protected against all forms of anti-competition practices from the foreign companies that are making supernormal profits from the sweat of Nigerians.
. Ola Emmanuel is a business planning consultant and founder of Leacent Incorporated Trustees, a network of entrepreneurs and group of cooperatives. He works with a team of international consultants to conceptualise and plan agribusiness and housing projects. As a certified trainer authorised to use the International Labour Organisation’s enterprise development modules, he trains entrepreneurs and organises workshops and seminars for potential and practising entrepreneurs as well as business managers and cooperatives. He also speaks and facilitates at leadership and management workshops on invitation. His book, Business Planning Made Easy: Step by Step Guide On How To Turn Your Idea To Profitable Business’ is the latest of the books authored by him. Tel.: +234(0)9068602954 (call and sms), +234(0)8023257707 (WhatsApp only).
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