SA’s competition authority said on Tuesday it is expediting its investigations into “excessive” pricing by airlines after receiving formal complaints from consumers as ticket prices continue to soar.
Airline ticket prices have skyrocketed in recent weeks in the wake of the collapse of Comair, which accounted for as much as 40% of Southern Africa’s airline capacity.
Business Day carried out an analysis of various travel booking sites that showed in recent days a one-way flight from Johannesburg to Cape Town cost on average between R3,000 and R7,000, up from about R800 a year ago.
The Competition Commission, a key statutory body mandated to investigate abuse of dominant positions and mergers in order to achieve equity and efficiency in the economy, said it had received three formal complaints over the past few weeks.
“At this stage, I can only confirm that the commission has received three complaints against airline companies for excessive pricing (during the course of June and July). We are busy investigating these cases on an expedited basis,” commission spokesperson Siyabulela Makunga told Business Day on Tuesday.
When Comair initially suspended operations at the end of May due to a lack of funding, the commission said it had met airlines Lift, FlySafair, Airlink and SAA amid concerns that the decision by the Kulula and British Airways operator to halt operations could lead to a spike in airline ticket prices. The commission said at the time it wanted to prevent any possible price gouging, unfair, unreasonable or unjust pricing emanating from the supply shock.
Comair subsequently tumbled into provisional liquidation last month after failing to raise R500m in cash to keep its operations going, leading to a huge supply gap. Add the bruising fuel hikes, and airline ticket prices are likely to remain elevated for the foreseeable future.
But according to aviation analyst Phuthego Mojapele many of the remaining airlines are withholding “cheap seats” to maximise profits. Mojapele told Business Day that consumers are on their own, and the Competition Commission is not well equipped to tackle the complex airline ticket pricing methodology. He called for a dedicated body that will solely focus on protecting consumers from unreasonable pricing.
The Airlines Association of Southern Africa (AASA), which represents all big carriers in SA and the region, previously stated that it would be unreasonable and unfair for the competition authority to penalise airlines for failing to provide cheap tickets.
“Every airline sets its own fares based on their unique business models, scale of their operation, fleet composition and utilisation, fixed and variable costs, destinations and target markets,” AASA CEO Aaron Munetsi stated previously. There are typically various fares in each class of travel — such as economy and business — with their own terms, conditions and associated flexibility or restrictions.
“When an airline’s lowest and most restrictive fares have all been sold on a given flight the next fare levels are higher, but usually less restrictive. In this respect, no two airlines are the same. It would be unfair if one airline’s lowest band of fares was used as the standard against which others are measured, especially if they are sub-economic in the context of competing carriers,” said Munetsi.
“In the same way, it would be unfair to punish a boutique for selling a tailored suit at a price higher than that commanded by a department store for a functionally and similar-looking off-the-peg garment.”
Munetsi said an airline carries a finite inventory and, just like any other business, it would be unreasonable if it was penalised for failing to carry surplus cheap stock on the off-chance that one of its rivals might stop trading.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.