Relief for air travellers as new regulatory agency breaks monopoly, fosters efficiency

The Ministry of Aviation may have brought relief the way of consumers as it proposes to establish a separate economic regulatory agency to regulate financial and market practices of service providers. SADE WILLIAMS captures the details.

If the proposed autonomous Regulatory Agency, known as the Nigerian Aviation Economic Regulatory Unit (NAERU) to regulate the economic, commercial and financial practice of the aviation service providers, in the new Nigeria Civil Aviation Policy (NCAP) sails through, then aviation consumers are expected to heave a sigh of relief from the seeming bondage of price fixing or monopoly by some services providers.

Thus, the yearning and aspirations of consumers would be met as the Agency aims to minimise the potential misuse of market power by aviation service providers and foster a competitive, efficient and fair commercial environment where passengers receive quality services at reasonable prices.

With this, the economic regulation of the Aviation industry would be removed from the duties of the Nigerian Civil Aviation Authority (NCAA) by the Federal Government, which experts had hitherto said the government has not been efficient in providing.

Olu Ohunayo, an aviation analyst noted that such Agency, when established, would push the nation into having bigger and an encompassing standalone anti-trust agency to take care of anti-competitive and anti-consumer behaviour.

“I am in full support of the new standalone agency, the economic monitoring and regulations under NCAA did not meet the aspirations and yearning of consumers not because they did not have competent hands but because there was more emphasis on airworthiness, safety, etc, while economic suffered,” he said.

Ohunayo however expressed pessimism that experts in that field may not be allowed to take on the jobs.

“The problem now is, will they allow experts in that field to manage the Agency or will it be another habitat for appointees? he asked.

Also speaking in favour of the proposal, John Ojikutu, another analyst noted that economic functions should not have been the function of the NCAA from the outset adding that it is no longer the practice in other countries. “Ab initio, economic regulation of the industry cannot be a function for the NCAA because there would be conflict of interest to regulate safety of a sector as well as its economy. The United States Federal Aviation Administration realised the implication of this following the report of the 9/11 mishap in 2001 and it had to give that responsibility to the Department of Trade. It will be a window for fraud, however, if the Ministry insists on taking that function,” he said.

According to the proposal, tariff of aviation service providers are to be regulated by the Economic Regulator in accordance within International Civil Aviation Organisation (ICAO) policy and in consultation with interested stakeholders of the services.

Stella Adaeze-Oduah, Aviation minister, while presenting the new 2013 NCAP, noted that “the new unit is being established so as to minimise the potential misuse of market power by aviation service providers and foster a competitive, efficient and fair commercial environment where passengers receive quality services at reasonable prices.”

The autonomous Economic Regulatory Unit, however will be supervised by the Minister of Aviation when established.

The objectives of the new unit as stated in the Aviation Policy are to: remove leakage and ensure transparency of all financial data required to determine the basis for charges; assess and encourage efficiency and efficacy in the operation of providers or monitor and encourage investments to meet future demand.

It is also to ensure users’ views and interest are adequately taken into account apart from ensuring safety and security of operations, development and maintenance of infrastructure, promotion of competition and fair access of users to airport and air navigation services at rates and charges consistent with ICAO policies and guidelines and the NCAP.

Also, it will ensure that all aviation tariffs and charges are in accordance with ICAO policy and guidelines.

“Therefore, in pursuance of the above objectives, government will put in place necessary machinery to regulate the economics of respective airports and air navigation services and facilitate the establishment of an autonomous Aviation Economic Regulatory Unit, revenues generated by the civil aviation sector are re-invested in this sector in accordance with ICAO’s policies on charges (Doc 9082).

“Aviation charges are only applied to services rendered and in accordance with ICAO policy and guidelines and international best practices, aviation tariffs and charges are to be reviewed from time to time in accordance with the realities in the industry and in consultation with interested stakeholders.

“All aeronautical charges are to be filed with the Nigerian Aviation Economic Regulatory Unit for the purpose of anti-trust and consumer protection,” she said.

Article accredited to Businessday