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Calls for Boycott as British Airlines Refuse to Back down on Exorbitant Ticket Prices

By on April 17, 2012

The British Airlines alleged by government officials to be involved in exorbitant price fixing in Nigeria have made it quite clear that they do not intend to reduce their fares anytime soon.

On Monday, the Director General of the Nigerian Civil Aviation Authority, Harold Demuren, disclosed to lawmakers that British Airways and Virgin Atlantic were involved in price fixing of the Passenger Fuel Surcharge (PFS).

He said, “BA and VAA coordinated and cooperated in fixing, periodically raising and maintaining the Passenger Fuel Surcharge with respect to travel including to and from Nigeria.”

“The PFS, having been discovered not to be what BA and VAA portrayed it to be, was a special device that deprived the Federal Government of legitimate revenue that should have been derived from the statutory five per cent of the Ticket Sales Charge.

“In addition to depriving the NCAA of the statutory revenue, BA and VAA also cheated and deprived other allied service producers, such as travel agents, who were paid commission only on the base fare and deprived of income on the PFS, which they legitimately earned.”

British Airways in its own submission said it was not legally wrong and that the cost of doing business amongst other things was high in the country and so it could charge whatever it liked.

British Airways’ Country Manager, Mr. Kolawole Olayinka said it was unfortunate that BA’s profitability was being discussed in the Senate.

Also a statement from the British airline’s consultant, The Quadrant Company reads, “Comparing fares across different routes is notoriously difficult due to the number of factors, which can influence pricing. Distance and geographic location are just two relatively minor factors. Of far greater importance are factors such as market size, demand mix (the proportion of premium to economy traffic), comparative operational costs and, most significantly in this case, capacity.”

“The market in Ghana is smaller than Nigeria and has lower premium traffic as a proportion of total traffic. Premium passengers in Nigeria tend to book closer to the date of travel which results in higher fares, and once revenue management principles are applied British Airways allocates a number of seats to each fare class and cheaper fares are available for bookings made in advance of the travel date, but these will necessarily be limited to ensure that there are still seats available for purchase closer to the date of travel. This will, therefore, have an impact on prices, as it would do in any high demand/capacity restricted market.”

Commenting on the recent disclosure Ekene Ezehi an aviation stakeholer in Lagos said, “It appears the only way around the exorbitant prices is for our government to boycott first class and business class on British Airways or boycott the airline altogether.”