Competition Commission red lights Airlink and Safair merger
SA Airlink and Safair say they are disappointed by the decision and will approach the Competition Tribunal to allay the commission’s concerns
SA Airlink and Safair said they were disappointed by a decision by the Competition Commission to prohibit their proposed merger. In a joint statement on Friday, the two regional airlines said they would approach the Competition Tribunal to allay the Competition Commission’s concerns.
The airlines announced their proposed merger in November 2017.
The commission said on Friday that the transaction would be likely to result in a substantial prevention of competition. It said the merger would be likely to remove a competitor to Airlink, and that Safair offered competitive prices. A merger could result in substantial price increases, it said.
Safair operates a passenger and cargo service and has a large share of the humanitarian-relief market in Africa. It has provided specialised aviation services since its inception in 1965. In 2013, it launched the regional low-cost carrier FlySafair in competition with, among others, the 100% South African Airways (SAA)-owned Mango Airlines.
Airlink is the largest independent regional airline in Southern Africa and operates a feeder network linking smaller towns and regional centres in SA in a strategic alliance with SAA. It transports about 1.4-million passengers a year.
The Sishen Iron Ore Company Community Development Trust owns about 32.5% following an empowerment deal made in 2012. Its other shareholders include Coronation Capital, SA Airlink Investments CEO Rodger Foster, Barrie Webb and SAA (2.96%).
The commission said it was concerned also about competition constraints on future routes in which that Safair might choose to operate and that an exchange of sensitive information might compromise SAA. This could enhance and facilitate anticompetitive co-ordinated conduct.
The two airlines said they disagreed with the commission’s decision and the points it had raised to justify its decision. They said most of commission’s concerns related to “airline operational technical matters”, though they preferred not to elaborate.
“We firmly believe the proposed transaction will be beneficial, not only for the two companies, but for their customers, employees, suppliers, the local and regional air transport markets as well as the broader South African economy,” the airlines said.