South Africa’s Airlink under antitrust scrutiny

Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) is currently appearing before South Africa’s Competition Tribunal following a 2018 antitrust investigation into its pricing between Johannesburg O.R. Tambo and Mthatha in the Eastern Cape following three historical complaints, amongst which from the short-lived Fly Blue Crane (Johannesburg O.R. Tambo).

Hearings (case CR280Feb18) started on August 7 and will run until August 18. They follow the 2018 investigation by the Competition Commission – which advises the Tribunal – into complaints that Airlink allegedly contravened South Africa’s Competition Act by abusing its dominance on the route and in the regional airline market. The complainants include Mthatha businessman Khwezi Tiya; Mthatha’s OR Tambo District Chamber of Business; and Blue Crane Air (Pty) Ltd (branded Fly Blue Crane), a domestic low-fare airline that briefly operated between September 2015 and November 2016 when it entered business rescue before discontinuing flights indefinitely on February 3, 2017. According to ch-aviation research, Fly Blue Crane effectively remains dormant, being listed as active on the South African company register but having last filed an annual return in 2016.

According to a report by News24, the Competition Commission found that Airlink’s pricing had contributed to the exit of Fly Blue Crane on the Johannesburg-Mthatha route. Fly Blue Crane had entered the domestic market with low-fare flights from Johannesburg to Bloemfontein, Kimberley, George, Cape Town International, and Mthatha, in competition with South African Airways, now defunct South African Express, and Airlink – then operating as South African Airlink (Johannesburg O.R. Tambo) under a franchise agreement with SAA. The Commission alleges that Airlink acted predatorily by lowering its prices, forcing the exit of Fly Blue Crane on the Mthatha route. 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.

“Numerous factors must be considered when examining the complex economics of operating an air route,” Airlink said in a statement when asked for comment. “We disagree with the Competition Commission’s recommendations along with the logic underpinning them. However, the Competitions Tribunal presents us with an opportunity to challenge those recommendations. We are doing so by putting forward our argument backed by supporting evidence, which we believe will demonstrate Airlink competed fairly on the Johannesburg-Mthatha route and has always provided reliable, convenient and safe air services at economically-sustainable fares that represent good value,” the airline stated.