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South Africa: Comair Tribunal Witness Helps SAA Out
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Business Day (Johannesburg)
27 March 2008
Posted to the web 27 March 2008
Chantelle Benjamin
Johannesburg
A WITNESS brought in by Comair to help make its case at a Competition Tribunal hearing yesterday into uncompetitive behaviour by South African Airways (SAA) ended up instead conceding an important point to SAA.
A casual observer stumbling into the third day of the commission hearing would have been forgiven for thinking that Tourvest commercial director Conrad Mortimer was a witness for SAA after he agreed during cross-examination by SAA that it would have been difficult for travel agents to make customers use an airline they did not want to use.
It was a small but significant victory for SAA, which is defending itself against claims by Nationwide and Comair that incentives offered to travel agents between 1999 and 2004 were designed by SAA to freeze out competitors.
Comair wants to pursue a civil claim for damages in the high court and is asking the competition authorities for an order that recognises SAA's liability. Nationwide also looks set to lodge a civil claim for loss of business.
Another Competition Commission loss would be bad news for SAA, which has already paid out R100m in fines, imposed by the commission, to the treasury. It can also ill afford any further legal costs as it battles to restructure its company.
A collective sigh of relief must have been heaved by counsel for SAA yesterday after Mortimer made his concession about four hours into cross-examination.
SAA is arguing that as the dominant player, occupying at least 40% of the domestic market and offering incentives, including loyalty programmes and frequent flights, it would have attracted the lion's share of customers even without incentive schemes for agents.
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SAA counsel Rafik Bhana said Mortimer's testimony in 2006, that agents were able to shift business in favour of certain airlines, was "purely subjective".
Bhana said agents would always be subject to the demands of the market and would have to give clients what they wanted. Mortimer agreed, saying that every client arrives at a travel agent with "basic specifications" and that many would have favoured SAA.
Mortimer qualified his statement, saying that airlines, SAA included, acknowledged that travel agents had influence in the value chain, or they would not bother to provide incentive schemes.
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