Sameera Casmod | sameerac@radioislam.co.za
07 August 2023 | 14:41 SAST
1 min read
Johannesburg: Hearings against Airlink started on Wednesday, 2 August 2023 at the Competition Tribunal. This follows an inquiry by the Competition Commission in 2018 that determined Airlink, formerly known as SA Airlink, allegedly overcharged its clients between 2012 and 2016. According to the commission, the cost was a factor in Fly Blue Crane, a competitor airline, leaving the Johannesburg-Mthatha-Johannesburg route. Charges were laid against Airlink on the basis that the airline contravened the Competition Act and abused its dominance by charging exorbitant prices for flights during that period.
Three complaints were lodged with the commission by local businessman Khwezi Tiya, Fly Blue Crane, and the OR Tambo District Chamber of Business, prompting the investigation into Airlink’s pricing practices. The preliminary findings suggested that customers had overpaid by more than R100 million over five years due to excessive pricing.
In addition to excessive pricing, the commission also accused Airlink of engaging in predatory pricing by lowering its prices below average variable costs and average avoidable costs when Fly Blue Crane entered the market in 2016. This predatory tactic reportedly forced Fly Blue Crane’s exit in January 2017.
The commission’s 2018 report estimated that customers could have saved between R89 million and R108 million if Airlink did not charge excessively during the investigated period.
Airlink has firmly denied the allegations and opposed both the excessive and predatory pricing claims. The legal proceedings continue, and last week, the Competition Tribunal heard evidence from three witnesses associated with the commission. This week, further testimonies from witnesses linked to the commission and Airlink are expected, along with financial and economic expert evidence.
If found guilty, Airlink could face an administrative penalty of up to 10% of its annual turnover. The hearings are closely watched, as the outcome may have implications for competition in the domestic airline market on the Johannesburg-Mthatha-Johannesburg route.
As the case unfolds, Airlink’s legal team has raised objections, questioning the Competition Commission’s approach, and urging the tribunal to dismiss what they consider an “unremarkable” excessive pricing case.
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