A 14 YEAR-long battle between Comair and SAA came to an end on Friday, February 15, when the two airlines reached a settlement that will see SAA pay R1.1 billion plus interest to Comair as well as Comair’s taxed legal costs incurred to date.
The legal dispute relates to incentives SAA paid to agents between April 2000 and May 2001 as well June 2001 and March 2005, which reportedly resulted in travel agents favouring SAA for domestic flights over more economical alternatives.
Aviation analyst Joachim Vermooten estimates that the cost to travellers could be as much as ten times higher than the settlement between SAA and Comair.
SAA’s incentives to agents first came under scrutiny in 2000, when Nationwide lodged a complaint against SAA with the Competition Commission, accusing the airline of trying to exclude it from the domestic airline market. The Commission took the case to the Competition Tribunal in May 2001 and later that year amended its complaint to refer to “other competitors”, which by implication represented Comair – the only other player in the domestic airspace at the time.
Nationwide and 1Time are both considered to be casualties of SAA’s incentive schemes these airlines went into liquidation in 2008 and 2012 respectively.
In rulings in 2005 and 2010, the Competition Tribunal found SAA’s incentive schemes to be contravention of the Competition Act, with each ruling dealing with a separate period.
It was the Tribunal’s rulings that paved the way for Comair to pursue a civil claim, which it initiated in 2006.
Friday’s settlement was made an order of Court by the Supreme Court of Appeal and comes after SAA appealed a 2017 ruling by the South Gauteng High Court to pay Comair R554m plus interest at 15,5% for engaging in anticompetitive behaviour.
In a statement, SAA said the dispute should have been handled differently.
“The finalisation of this case marks the conclusion of one of the disappointing legacy matters that dragged on for far too long and was overdue. The current airline leadership at board and executive management level is committed to closing all legacy issues and to start on a clean slate,” a statement reads.
Comair made no comment on the ruling, but advised shareholders of the ruling on February 15.
According to Business Day, after Comair’s announcement of the settlement, it’s market capitalisation grew by R470 million to R2.6bnas its share price closed 21,98% higher at R6.25 – a ten-month high.
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