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- The Competition Tribunal has started hearings against Airlink.
- The hearings follow a 2018 investigation by the Competition Commission that found the airline had allegedly overcharged its customers.
- The pricing had contributed to the exit of rival airline, Fly Blue Crane, on the Johannesburg-Mthatha-Johannesburg route, the commission found.
- For more financial news, go to the News24 Business front page.
Local airline Airlink, previously known as SA Airlink, appeared at the Competition Tribunal on Wednesday over allegations of excessive and predatory pricing for its flights on the Johannesburg-Mthatha-Johannesburg route.
According to the tribunal, the Competition Commission investigated three complaints against the local airline for contravening the Competition Act and abusing its dominance on the route and in the regional airline market.
The complaints were previously laid at the commission by local businessman Khwezi Tiya, airline Fly Blue Crane, and the OR Tambo District Chamber of Business.
Sanctioned by the Competition Act, excessive pricing is defined as charging customers with excessive prices for goods and services, to their detriment. Predatory pricing occurs when a business lowers its pricing below its average variable costs and average avoidable costs.
Between September 2012 and August 2016, the local airline was accused of charging customers excessive prices.
Rival airline Fly Blue Crane entered the domestic airline market between Johannesburg and Mthatha in October 2016. Founded in 2015, Fly Blue Crane operated low-cost flights to Bloemfontein, Johannesburg, Kimberley, Cape Town, Mthatha and George.
Airlink, which changed its name from SA Airlink in 2020, was accused of predatory pricing by lowering its prices, forcing the exit of its rival airline and only competitor on the route in January 2017.
Fly Blue Crane had been placed in business rescue in November of the previous year, forcing it to interrupt its flight operations in February 2017. It has not operated since.
Airlink is then accused of charging local passengers excessive prices again after Fly Blue Crane's exit.
According to a 2018 report by the commission, preliminary investigations showed that customers of Airlink would have saved between R89 million and R108 million if the airline did not charge excessively, with customers overpaying more than R100 million over five years.
The commission found that the airline engaged in predatory pricing when Fly Blue Crane entered the market by pricing below its average variable cost and average avoidable costs for some of its flights.
"The effect of the predation is also likely to deter future competition on this route from other airlines," read the report.
The commission formally charged Airlink in 2018 and sought an administrative penalty of 10% of its annual turnover, before referring the matter to the tribunal.
In response, Airlink has denied the allegations and opposed both allegations.
The hearings at the Competition Tribunal are expected to continue this week.
Airlink was approached for comment. Its comment was not received at the time of publication.
