Southern African regional airline, Airlink, has denied allegations of “predatory pricing” on the JohannesburgMhtatha route and has welcomed the opportunity to put its case before the Competition Tribunal “so that the matter can be put to rest”. That was the message from Airlink CEO, Rodger Foster, in response to the Competition Commission’s (CC) decision last week to refer complaints of pricing and market access on the Johannesburg-Mthatha route to the South African Competition Tribunal. “Airlink has, and will continue to, cooperate fully and openly with South Africa’s competition authorities. We are confident our conduct has been and remains in full compliance with competition rules and the law,” Foster told FTW in a written reply. He added: “In the meantime Airlink remains committed to providing the vital air services linking Mthtatha with Johannesburg, which enable and promote trade, travel, tourism, economic growth and development in the Walter Sisulu District of the Eastern Cape Province.” “The Commission is concerned about SA Airlink’s conduct and will seek the maximum administrative penalty before the Tribunal,” said deputy commissioner, Hardin Ratshisusu, explaining that the Competition Commission had referred Airlink to the Competition Tribunal for prosecution on charges of “excessive and predatory pricing” following the findings of its investigation. The Commission launched an investigation after complaints were lodged by Khwezi Tiya from Fly Blue Crane and the OR Tambo District Chamber of Business between 2015 and 2017. The complaints were about the JohannesburgMthatha route with the complainants alleging that Airlink’s prices were excessive before Fly Blue Crane entered the route. It was also alleged that SA Airlink had lowered its prices below its costs when Fly Blue Crane entered the route. After Fly Blue Crane exited the route, the carrier allegedly hiked its fares. According to a CC spokesperson, the investigation found, among others, that lower prices would have resulted in more passengers travelling by air on the route, possibly contributing to the local economy of Mthatha; that the airline had engaged in predatory pricing in that it had priced below its average variable costs and average avoidable costs for some of its flights; and that the predatory pricing conduct of Airlink had contributed to the exit of Fly Blue Crane, their only competitor at the time on the JohannesburgMthatha route.
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We are confident our conduct has been and remains in full compliance with competition rules and the law. – Rodger Foster
