Airlink probed on pricing
PRIVATELY owned regional airline, SA Airlink, is accused of predatory pricing to the extent that consumers could have saved between R89m and R108m on just one route if it had not been for the airline’s excessive pricing.
This is according to the Competition Commission, which has referred the regional feeder airline to the Competition Tribunal for prosecution.
Airlink is based in Ekurhuleni and its main activity is to act as a feeder airline between small towns and larger hub airports. It has code-sharing and schedule coordination agreements with SAA and SA Express.
The commission said yesterday complaints were lodged by Khwezi Tiya, Fly Blue Crane and the OR Tambo district Chamber of Business between 2015 and last year.
The complaints concerned the Johannesburg-Mthatha route with the complainants alleging Airlink’s prices were excessive before Fly Blue Crane entered the route. It was also claimed that Airlink then lowered its prices below its costs (predatory pricing) when Fly Blue Crane entered the route.
Then, it is claimed, Airlink went back to its exorbitant prices (excessive pricing) after Fly Blue Crane exited the route in January last year.
Lower prices would have resulted in more passengers travelling by air on the route, possibly contributing to the local economy of Mthatha, the commission said.
“The airline engaged in predatory pricing in that it priced below its average variable costs and average avoidable costs for some of its flights,” the commission said.
The predatory pricing contributed to the exit of Fly Blue Crane, its only competitor at the time on the Johannesburg-Mthatha route and the effect of the predation is also likely to deter future competition, deputy commissioner, Hardin Ratshisusu said.
“Our estimates show that air travellers in that area overpaid more than R100m for the five years over which the conduct took place.
“The commission is concerned about Airlink’s conduct and will seek the maximum administrative penalty before the tribunal,” Ratshisusu said. – 701068