The Competition Tribunal is hearing a case of excessive pricing and predatory pricing complaints against SA Airlink. The matter relates to the airline’s pricing conduct on the Johannesburg-Mthatha route between 2015 and 2017.
The complaints of excessive pricing were lodged by three parties including the OR Tambo District Chamber of Business, defunct FLY Blue Crane Airline and Khwezi Tiya, a businessman contesting in his own capacity.
The complainants have argued that SA Airlink consistently maintained its high prices until a new airline at the time, Fly Blue Crane, entered the Johannesburg-Mthatha route.
Competition Tribunal holds hearing into allegations of predatory, excessive pricing against SA Airlink
The tribunal heard that SA Airlink proceeded to lower its prices once the new competitor offering lower prices entered the route before pushing back up its prices when Fly Blue Crane collapsed.
Secretary of the Regional Office of the OR Tambo District Chamber of Business, Dr Andile Nontso says SA Airlink’s high prices had wide ranging implications for small, medium and micro business owners.
“Now, they have to travel to East London and drive, making their goods more expensive than it was going to be from Mthatha, because sometimes they have to sleep over in East London. Even the tourism business people lose business because people want to finish as early as 2pm because they have to rush to East London for the early morning flight but if this flight was cheaper people wouldn’t have a problem working here until 5pm.”
Dr Nontso says when the now defunct SA Express entered the Johannesburg-Mthatha route it agreed to an affordable rate with stakeholders which SA Airlink matched.
He says however, SA Airlink returned to its high prices following SA Express’s collapse.
“They requested up to R3 500, but our initial request we spoke about was R2 500 and they did that. Then SA Link came down to that permanently until SA Express left and they went back to that R7 000/ R8 000 and all of that which is our problem with them.”
Unsustainable prices
SA Airlink has argued that Blue Crane’s prices were unsustainable therefore given the competitive nature of the airline industry it made business sense for it to push back up its rate after Blue Crane exited the market.
SA Airlink’s Chief Financial Officer De Villiers Engelbrecht says the Johannesburg-Mthatha route has not returned to profitability since the COVID-19 lockdown restrictions were imposed.
“Chair this example illustrates the difficulty of establishing a route. Even though we had presence on that market and we were recognised as a reliable operator, post Covid we have found it difficult to make sense of that route. On a cumulative basis we’re still running on a loss on that route today. Post Covid we had to re-establish all of our routes from scratch.”
