FIFI PETERS: The Competition Commission has said that low-cost carriers whose wings are still in the air have committed to not change their pricing methodologies to exploit the temporary clipping of Comair’s wings. The CompCom said this in a statement, following its meeting with the existing players still in the sky – that is Lift, FlySafair, Airlink and SAA, and this after Comair suspended flights on Tuesday due to financial difficulties it is having.
We have the commissioner of the Competition Commission, Tembikosi Bonakele, [with us] for more on the story. Sir, thanks for your time. How would you say the meeting went with the low-cost carriers?
TEMBIKOSI BONAKELE: Thanks, Fifi. It went very well. It was a very positive meeting. I think they also appreciated our proactive stance, and we certainly also appreciated their commitment not to exploit the current situation. As we have reported, they did commit to not changing their pricing methodologies.
Some of them committed to increasing capacity, bringing capacity into the market, but that cannot be done in a day or so.
It’s sort of medium-termish, but at least we got some commitments from them.
FIFI PETERS: What does that mean, sir, because when I read that line in your statement that the low-cost carriers had committed not to change pricing methodologies to exploit Comair’s situation, I thought to myself that’s not necessarily saying that their prices are not going to change. They won’t change their prices because of Comair being grounded [is what] you said precisely. I’d like to know how you are going to measure that, how will you be able to measure that the prices haven’t changed because of Comair’s difficulties?
TEMBIKOSI BONAKELE: Well, I think the word is ‘methodology’; there is a way in which they set prices now, taking into account the demand-and-supply situation, how they set prices during peak seasons, and so on. We have quite a good understanding of that, so we would be able to know if they have changed those methods.
This doesn’t mean that you will not have peak times having higher ticket prices.
But I think what we are watching is exploitation, which would mean that they would change their kind of basket price, their fleet arrangement and so on. So that’s what we would be looking at.
FIFI PETERS: I see that CemAir wasn’t at the meeting. Is that the case, and if so, why?
TEMBIKOSI BONAKELE: Which one is this?
FIFI PETERS: CemAir. Yes, sir.
TEMBIKOSI BONAKELE: Yes. It’s just a matter of time. We’re still engaging with the industry. So this announcement was only made, I think, on Tuesday if I’m not mistaken. We got a meeting with them yesterday and today. So we are still doing that. We are also meeting with regulators and we would also be meeting with government to share ideas about how to mitigate the situation. So these meetings are ongoing.
FIFI PETERS: A lot of meetings are scheduled there in your diary. Over what time period? I imagine pretty soon, given the fact that this is kind of urgent.
TEMBIKOSI BONAKELE: Yes, it is very urgent. We are reaching out to everyone. It has to be in a matter of days and hours, and not weeks.
FIFI PETERS: You spoke about the fact that the existing carriers had committed to bringing more capacity on the market. You said that it was going to take a little bit of time. I’d like to understand just the size of the gap in the aviation market that Comair’s grounding has left.
TEMBIKOSI BONAKELE: It works out to about 40%. We would not be disclosing how much capacity will be coming in, obviously, because that’s competitively sensitive.
But what we have been saying is that everybody must seize the moment to invest in capacity.
That’s the only thing that’s going to save us in the long run.
FIFI PETERS: Okay. We have seen the Competition Commission issue stern warnings against various sectors indulging in behaviours, or price-gouging behaviours. We’ve seen it before across the sectors in the economy, and we’ve also seen certain players not listen and do it anyway.
Read or listen: FlySafair responds to accusations of price gouging
Therefore I’d like to understand, in the event that it happens this time around, what is the consequence – how will the commission respond to such behaviours?
TEMBIKOSI BONAKELE: Firstly, I really don’t believe it would happen, given the positive response we have been getting. I think, though, if it does happen we should be able to pick it up. We are monitoring, and consumers are also quite sensitive. They will let us know. When we do get information like that, we can investigate prices, cases against excessive pricing, which is a form of abuse of dominance that we can prosecute in terms of the Competition Act.
FIFI PETERS: All right. But your total message essentially to South Africa today is that you’re pretty confident that the existing players, Lift, FlySafair, SAA and CemAir, whom you’re still talking to, will not use this situation to their advantage and exploit consumer prices. That’s your bottom line.
TEMBIKOSI BONAKELE: Precisely. It’s always better to be proactive in situations like this. As you know yourself, we have said in the recent past we are now using this method, because it’s always difficult once the damage has been done to find appropriate redress. So it is better to prevent it from happening – and this is the commitment that we’ve got now.
FIFI PETERS: All right, sir. Thanks so much for your time. I’m going to take your confidence and make it mine. That was Tembikosi Bonakele, the commissioner of the Competition Commission.