The Competition Commission has referred regional feeder airline SA Airlink to the Competition Tribunal for prosecution on charges of alleged excessive and predatory pricing.
The commission initiated an investigation into SA Airlink’s conduct with regard to the Johannesburg–Mthatha route after complaints were lodged by Khwezi Tiya, airline Fly Blue Crane and the OR Tambo District Chamber of Business between 2015 and 2017.
The complainants alleged that SA Airlink’s prices were excessive before Fly Blue Crane entered the route and that it then lowered its prices below its costs when Fly Blue Crane started operating on the same route.
They further alleged that SA Airlink again implemented exorbitant prices after Fly Blue Crane stopped operating on the route in January 2017.
The commission’s investigation found that SA Airlink had contravened the Competition Act by abusing its dominance from September 2012 to August 2016 by allegedly charging excessive prices on the route to the detriment of consumers. The commission estimates that consumers would have saved between R89-million and R108-million if not for the alleged excessive pricing.
Further, the investigation found that SA Airlink had engaged in alleged predatory pricing by charging prices below its average variable and avoidable costs for some of its flights, which contributed to its competitor Fly Blue Crane’s exit from the route.
The commission states that this is also likely to deter future competition on the Johannesburg–Mthatha route from other airlines.
The commission is seeking an administrative penalty of up to 10% of SA Airlink’s yearly turnover for both the alleged conduct of excessive pricing and predatory pricing.
It has also asked the tribunal to determine other appropriate remedies to correct SA Airlink’s conduct.