Air­link probed on pric­ing

The New Age (Free State) - - INSIDE - TNA RE­PORTER busi­ness@the­newage.co.za

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

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