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SAA questions Comair’s agent incentives

18 Nov 2015 - by Dorine Reinstein
Comments | 0

SAA has hit back at Comair

– following Comair’s High

Court legal challenge, which

was dismissed earlier this

month – lodging a claim with

the Competition Commission

questioning the payment of

incentives by Comair to travel

agents.

In 2005, the Competition

Commission fined SAA for

an abuse of dominance

centred on its use of loyalty 

override agreements with

travel agents. According

to SAA, Comair’s current

incentivisation scheme is

similar to SAA’s in 2005.

Erik Venter, ceo of Comair,

argues, however, that SAA

still has approximately 70%

of domestic sales through

BSP, making it impossible

for Comair to be deemed

dominant in this market

segment. “Furthermore, the

conditions imposed by the

Commission on SAA were

specific to SAA.”

This move by SAA comes

as Comair is consulting legal

counsel to decide whether

it will appeal the High Court

ruling that dismissed the

carrier’s legal challenge of the

R5bn government guarantee

granted to SAA.

Judge Hans Fabricius

dismissed Comair’s challenge

saying the ministers acted

legally in their decision to

grant government guarantees

for SAA.

He said the ministers

needed to take into account

the consequences for the

economy if SAA could

no longer function.

The consequences of the

judgment should be of great

concern to taxpayers, Erik

says. “The ruling confirmed

that the Minister of Finance

has no obligation to record

the rationale for his decisions

and that government does not

have to take its own policies

into consideration.” He adds

that, in a nutshell, SAA can

receive unlimited guarantees

without any expectation of

the airline ever repaying the

resulting loans.

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