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SAA to pay R1 bln in damages to Comair

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The South African Airways (SAA) says excessive damages awarded to competitor Comair cannot be justified.

The High Court in Johannesburg ordered SAA to pay more than R1 billion in damages to Comair for anti-competitive conduct. But the national carrier is challenging the matter in the Supreme Court of Appeal in Bloemfontein.

Cash-strapped SAA wants the amount to be reduced to just over R300 million.

In papers before the SCA, SAA argues that the High Court was correct to award damages to Comair. But it wants the amount reduced, claiming the High Court’s decision was based on inadequate facts.

The matter relates to a case initiated by Comair against SAA, 16 years ago.

It revolved around SAA’s anti-competitive travel agent incentive schemes. The scheme, which was in place from 2000 to 2005, was designed to keep travel agents loyal to SAA. The national carrier paid them to divert customers to it, rather than rival airlines.

The Competition Tribunal found that this violated the Competition Act.

“The competition act prohibits exclusionary clauses by dominant players such SAA. SAA did not appeal the ruling by the competition tribunal,” says legal expert, Lebohang Mokhele.

SAA further argues that there will be a substantial variation between the SCA’s own assessed damages and those awarded by the High Court. The matter will be heard next month. Comair, which is the holding company of British Airways and Kulula airlines, has hit back.

In its cross-appeal, Comair submits that its market share would have continued to grow over the relevant period. As a result, Comair seeks an increase of R344 million in damages awarded in the second action. This will be to a total amount of almost R800 million, plus interest.

Meanwhile, the latest court challenge comes at the time when Comair is entangled in a dispute with labour union Numsa over alleged wage discrepancies.

Comair is accused of paying workers in the same grade different wages, based on their race. Comair has vehemently denied this.
The matter is heading to the Commission for Conciliation, Mediation and Arbitration.

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