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Comair’s damages claim against SAA for abusing its market dominance seems set to reach R2 billion, once interest is factored in.
The operator of budget airline Kulula, as well as the local representative of British Airways, was in court this week, haggling with SAA over how much damage the national carrier’s anti-competitive conduct, which took place between 2000 and 2006, caused it.
This follows a landmark court ruling against SAA earlier this month, in favour of a damages claim instituted by another competitor, Nationwide, which is currently in liquidation. Nationwide got R104.6 million.
Both cases against SAA stem from its agreements with travel agents from 2001 to 2005, whereby it paid them to divert customers to SAA rather than other airlines.
Although online booking had already become a large channel for ticket sales at the time, travel agents were still responsible for up to 70% of sales back then.
Both cases also flow from a 2010 Competition Tribunal finding that this practice was an offence under competition law. SAA appealed that finding, but lost in the Competition Appeal Court in 2012.
Now all that is left to decide is the actual damage SAA’s deals with travel agents caused.
In its voluminous court papers, Comair put forward a model devised by an expert witness that came to a total of R898 million, related to two separate “damage periods”.
It also asked the court for 15.5% interest, which would push the total to about R2 billion.
SAA is relying on its own expert witness to argue that the damage was negligible.
Even if the court accepts parts of Comair’s arguments, SAA claims that it should be made to pay, at most, R298 million.
The highly technical case was allotted three court days, during which Comair argued that it suffered damages for a period even after SAA stopped its travel agent deals.
Advocate David Unterhalter, acting for Comair, used a racing analogy in court this week. “It is as though two identical athletes are racing, but one is made to carry a 50kg weight. Even after the athlete is allowed to drop the weight and catch up, he is still suffering a disadvantage,” said Unterhalter.
The Nationwide case set a precedent in that it was the first time a finding by the competition authorities led to a civil damages claim.
SAA will struggle to pay the higher damages being claimed by Comair. The state-owned airline has not produced financial statements since 2014 and is technically brankrupt – unless Treasury provides it with more guarantees to allow it to borrow money.
