SAA may have to cough up R1bn

Pretoria - South African Airways (SAA) is still studying the Competition Tribunal's ruling on its many years of breaking the law with its incentive scheme for travel agents.

Last week's long-awaited decision paved the way for Comair and Nationwide to institute civil claims against the national airline.

In the final arguments both claimed they had suffered significant damage as a result of SAA's uncompetitive behaviour, which had for years kept them out of the domestic market.

Both airlines had started preparations to approach the High Court.

After an almost decade-long legal dispute, the tribunal issued a declaratory order finding SAA guilty of the abuse of its dominant position in the market by excluding its competitors.

This was all the complainants needed to lodge a civil claim. The claims could together run to hundreds of millions, or even R1bn.

Nationwide initially indicated its claim could be for R269m. In the case of Nationwide's first claim against SAA, which involved a period of 18 months, compensation has already been paid.

The claim for the rest of the period, extending from 2001 to 2005, is currently being assessed.

Vernon Bricknell, Nationwide's former CEO, could not be reached for comment.

Comair CEO Gidon Novick says the group's activities were significantly broader than those of Nationwide during the abuse. Comair's claim for commercial compensation will therefore be considerably larger.

From April 2001 to March 2002 SAA, SA Express and SA Airlink had a 71% joint share of the domestic market. At the time, Comair's share was 18% and that of Nationwide 7%.

From 2004 to March 2005 the share held by SAA, SA Express and SA Airlink shrank to 58%.

New airlines entering the market - such as 1time (10%) and kulula.com (12%) - eroded market share.

Comair's portion shrank to 15% and Nationwide's rose to 10%.

- Sake24.com

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