Trade, industry & competition minister Ebrahim Patel will ask the Competition Commission to look into what can be done about airlines’ “surge pricing”.
The practice when service providers such as airlines hike their prices at times of peak or exceptional demand.
Answering questions by NFP MP Ahmed Shaik Emam in the National Assembly during a session with the economic cluster of ministers, Patel said it would have to be determined at what point surge pricing becomes excessive pricing.
“It is a significant concern to us,” Patel said. “We have seen a tendency not only in SA but globally in the last period — particularly after Covid-19 — called surge pricing”, which can mean that a more than fair return is extracted for the capital that has been deployed.
“It is an issue that competition authorities across the world are looking at — how does one deal with surge pricing and at what stage does surge pricing become excessive pricing. Excessive pricing is prohibited in our legislation.”
The minister noted that in terms of SA law excessive pricing only occurs when a dominant player puts up prices in the absence of competitors able thereby depriving consumers of choice a good service.
The minister noted that in terms of SA law excessive pricing only occurs when a dominant player increases prices that aren’t economically justifiable, limiting competitors to offer a lower price and thereby depriving consumers of choice.
“It is an area that we have to look at,” Patel said, adding there were constraints as the only tools available were those in the Competition Act.
Shaik Emam accused the bigger airlines of manipulating prices which caused smaller airlines to shut down.
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.