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The South African Competition Commission announced that it has referred SA Airlink to the Competition Tribunal for prosecution. This is on charges of ‘excessive and predatory pricing’ following complaints lodged by low-cost carrier Fly Blue Crane, businessman, Khwezi Tiya, and the OR Tambo District Chamber of Business between 2015 and 2017, regarding the Johannesburg-Mthatha route.
Allegations lodged by the aggrieved parties claim that SA Airlink’s prices were excessive before Fly Blue Crane entered the route, and were lowered to below cost subsequent to Fly Blue Crane’s entry. Upon Fly Blue Crane exiting the route, SA Airlink allegedly resumed its initial costing.
The investigation that followed found that SA Airlink had contravened the Competition Act by abusing its dominance from September 2012 to August 2016, and that its exorbitant pricing was to the detriment of travellers who would have saved between R89m and R108m.
“The predatory pricing conduct of SA Airlink contributed to the exit of Fly Blue Crane, and the effect of the predation is also likely to deter future competition on this route from other airlines,” the commission stated.
The Commission is seeking an administrative penalty of up to 10% of Airlink’s annual turnover, as well as for the tribunal to offer remedies to correct the conduct.
Airlink has acknowledged the complaints and the decision of the commission to refer the matter to the tribunal.
“Airlink has and will continue to co-operate fully and openly with South Africa’s competition authorities. We deny the allegations and welcome the opportunity to put our case before the Competition Tribunal so that the matter can be put to rest. We are confident our conduct has been, and remains, in full compliance with competition rules and the law,” said Airlink CEO and MD, Rodger Foster in a statement. Airlink has declined to comment in order not to prejudice the ongoing case.
“In the meantime Airlink remains committed to providing the vital air services linking Mthatha with Johannesburg, which enable and promote trade, travel, tourism, economic growth and development in the Walter Sisulu District of the Eastern Cape Province,” Foster added.
Source: tourismupdate.co.za
