Capacity constraints to blame for lack of action by CC?

Although Imperial Logistics has made an urgent request to the Competition Commission (CC) to initiate a market inquiry into the general state of competition in the domestic overnight express airfreight market, nothing has yet transpired, according to Michelle Neilson, marketing executive. Capacity restraints within the CC, she suggested, could be the delaying issue. The submission that Imperial has laid before the commission provided details of non-competitive conduct by state-funded SAA Cargo. It is the main player in the market, and its only private sector competitor is Imperial Air Cargo (IAC). IAC pointed out to the commission that SAA Cargo failed to pass on to customers increases in major cost drivers – such as fuel, landing and handling, air traffic navigation, aircraft leases and the impact of exchange rate deterioration. Indeed, according to Imperial Logistics chief integration officer Cobus Rossouw, SAA Cargo has frozen its prices since April 2012. “It is our view that SAA Cargo’s conduct can only be seen as an exclusionary strategy to eliminate the only remaining competitor, IAC, from the domestic overnight express airfreight market,” commented Rossouw. The urgency behind the Imperial request for a CC enquiry into this sector of the air cargo industry is because of company fears that, unless action is taken, the overnight express market might slip into a subsidised state-owned monopoly. This, Rossouw added “Would lead to a substantial increase in prices and a reduction in both efficiency and reliability in the domestic overnight express air cargo market.” Imperial has as yet received no notification of its request to the CC about the alleged uncompetitive behaviour. Nor, it is believed, has SAA Cargo. INSERT & CAPTION It is our view that SAA Cargo’s conduct can only be seen as an exclusionary strategy. – Cobus Rossouw CAPTION SAA Cargo, a major player in South Africa’s domestic overnight express air freight market, has been accused of non-competitive behaviour.