SAA competes with Comair at regulator
COMAIR may face a Competition Commission probe after national airline SAA accused the operator of budget airline kulula.com and British Airways flights in South Africa of using anti-competitive practices.
SAA claimed that Comair had been offering discounts and incentives in a manner that transgressed the Competition Act and created deals with suppliers which were exclusionary to the point that they locked out Comair competitors from dealing with the suppliers.
But Comair CEO Erik Venter hit back this week, saying the complaint was “bizarre”.
He pointed out that the Competition Commission had previously imposed conditions on SAA for abusing its dominance by, among other things, offering huge incentives to travel agents to sell SAA tickets.
Comair was not party to the conditions that the commission imposed on SAA, meaning it could offer incentives.
SAA spokesman Tlali Tlali confirmed the complaint and said that Comair’s conduct had had a “detrimental impact” on the industry.
But Venter said SAA was still paying an 8.5% incentive to travel agents when Comair was only averaging 2.5%.
“So, it is very hard to say Comair’s deals are having a negative impact on SAA,” he said.
He added that while SAA was giving away massive incentives to travel agents it also gave discounts of up to 18% on ticket fares to corporates and government departments.
It was hard to argue that companies “should be the beneficiaries of the taxpayers’ subsidies to SAA. All of these things just make the SAA complaint look very, very ridiculous”.
He said the commission had to consider why SAA — which in the past had claimed that incentive deals had no impact on travel agents — was complaining when Comair was implementing such deals to compete with SAA incentives.
Commission spokesman Mava Scott confirmed the complaint but could not provide further details. “The investigation is still under way,” he said.
The complaint was lodged by SAA legal adviser Viwe Soga two months ago, shortly before Comair’s case against the government’s bail-outs of SAA commenced in the North Gauteng High Court last month.
In this case, Comair argued that the government’s decision to grant an extended guarantee to SAA in 2013 — on top of previous guarantees — was unfair and unconstitutional. The guarantee provided security for SAA to borrow from lenders.
But earlier this week Judge Hans Fabricius dismissed Comair’s case and ruled that a decision by two cabinet ministers to grant the most recent guarantee was lawful.
SAA welcomed the ruling, but Venter was baffled by the speed with which the judgment was concluded — within two weeks after arguments were wrapped up last month.
He said: “It almost looks as if the judgment was pre-written. A lot of issues raised in court were not incorporated in the judgment. That creates grounds for taking it on appeal if we decided to go that route.”
Comair said the ruling implied that the minister of finance could bypass parliamentary processes and commit taxpayer funds without recording the rationale for his decisions.
Now Comair must deal with the SAA complaint, which is similar to complaints that Comair filed with the commission over SAA incentive schemes for the period between 1999 and 2005. It claimed SAA gave travel agents incentives to promote the airline’s tickets, which prejudiced Comair and Nationwide.
In 2005, competition authorities found that the schemes constituted prohibitive practices and it fined SAA.
Comair would head to court next year to seek a damages claim of about R1-billion and interest of the same amount, Venter said this week.
Tlali denied that the complaint was revenge for the recent court case. “The complaint … is entirely unrelated to the claim launched [by Comair] in the Pretoria High Court.”