Airlink continues bid for Safair merger
SA AIRLINK will appeal against a decision by the Competition Commission on Friday‚ which prohibits the proposed merger between the airline and Safair Operations.
The commission said the transaction would have been likely to result in a substantial prevention of competition.
Safair – which runs flights to and from East London Airport – and Airlink both said they were disappointed to learn of the decision. “We respectfully disagree with the decision and the points the commission has raised to justify its decision‚” Airlink said. “With this in mind‚ we will approach the Competition Tribunal for an opportunity to address and allay the Competition Commission’s concerns (most of which relate to airline operational technical matters) and for the tribunal to reconsider our application.”
Airlink said it would not elaborate on its arguments “as we do not wish to prejudice our case before the tribunal”.
However‚ it added: “We firmly believe the proposed transaction will be beneficial‚ not only for the two companies‚ but for their customers‚ employees‚ suppliers‚ the local and regional air transport markets as well as the broader South African economy.”
Announcing its decision‚ the commission said it was “of the view that the merger [would likely] result in the removal of an effective competitor to SA Airlink on the routes it currently operates on. Safair offers competitive prices and has been growing in the market both in terms of its existing routes‚ as well as recently entering new routes”.
“Safair is also a potential competitor of SA Airlink in those routes which it has not yet entered and is likely to pose a competitive constraint on SA Airlink bearing in mind its currently competitive pricing on competing and noncompeting routes.”
The commission found that there were significant price differences between Safair and SA Airlink and that if the merger were to be approved‚ there was a likelihood of significant price increases.
“Further‚ SA Airlink currently operates under agreements with SAA. In the event that the merger were to be approved‚ SA Airlink would have the ability to adapt the business strategy of Safair such that Safair is incorporated into the agreements between SAA and SA Airlink.”
Safair provides scheduled passenger services to and from major airport hubs in South Africa, and provides non-scheduled or chartered humanitarian aid and relief services to and from African countries as well as outside of Africa with a principal focus on remote regions like Antarctica. —