In a matter of a week, WestAir has successfully challenged an alleged predatory pricing model used by Air Namibia for decades to keep competitors out of the market.
The pricing model, is said to have for a long time kept Airlink out of Namibia.
WestAir filed affidavits to challenge the national flag carrier’s alleged predatory pricing model and Air Namibia responded by readjusting the prices, The Patriot is informed.
On the basis of mere threats, Air Namibia changed the pricing.
WestAir warned Air Namibia against lowering its prices again or else they would serve the flag carrier with affidavits.
This has been Airlink’s major headache for over decades now.
Eye brows have been raised as to who exactly is the force behind WestAir.
A high placed source that is well versed with the aviation history of Namibia has made these revelations just days after WestAir announced that it would be plying the domestic routes as well as regional.
The South African Civil Aviation Authority is said to be watching these developments with great interest.
Their concern is what is going on behind the scenes, who is the real Westair shareholder, and how can WestAir have such level of power?
“Last week Westair filed an affidavit in the High Court and served Air Namibia with papers through a legal firm. And all of a sudden within a week, Air Namibia changed the rules of business, which is the predatory pricing component, which they refused to do for the last 20 years,” said the source.
The source opined that, “it has to be that someone with a lot of political power got down at them” (Air Namibia).
There are grey areas at the moment as to whether the force is in bed with WestAir by association or by the virtue of shareholding.
WestAir has in the meantime thus acquired the rights to fly local. “Because if somebody asked you to change it for 20 years and within a week somebody else asks for it and you change, that somebody has a lot of power,” said the source further.
Air Namibia’s predatory pricing trump card
A bilateral air service agreement was signed at the dawn of Namibia’s independence between Namibia and South Africa which sanctions who has landing rights in a specific country.
There are said to be more than 3 000 such agreements world over.
The source revealed that both had to nominate three carriers with traffic rights and the South Africans nominated South African Air Ways and Airlink while Namibia nominated Air Namibia alone to have these rights.
Air Namibia is said to have enjoyed considerable protection from the start by being kept out of having to compete with other airlines, thus elbowing out Airlink.
“It was wrong from the beginning because you had three that you could nominate but Namibia chose just to cover Air Namibia. So all the time it was said you were enabling a monopoly, that you are limiting the free market in this regard, that why don’t you open the market for more competitiveness but there was this protection around Air Namibia,” the source revealed.
Meanwhile, South African Airlink flies to Namibia under the SAA brand and is owned by Roger Foster.
Air Namibia is said to have resorted to predatory pricing, keeping tickets low so as to starve off any would-be competitor.
“Foster struggled into Namibia,” the source divulged.
The Patriot has been informed that Air Namibia has been subsidizing its tickets (low prices) with the state subsidy.
The same has been observed by the Namibia Competition Commission (NaCC).
NaCC is yet to make a ruling in this regard. “They bled themselves. They needed that money for investments and they also kept Air Link out of the market in that way,” The Patriot is informed.
IATA governs these prices but because they must meet the entity’s protocols, Air Namibia took this subsidy, said the source.
The Patriot reached out to State Owned Enterprises minister Leon Jooste to get clarity on why this monopoly was not broken many years ago, but he was unreachable.
Airlink is bracing to serve Air Namibia with a direct claim of between N$100 million and N$150 million for having refused to abandon the said predatory pricing tactics. Last year, The Namibian reported that NaCC “tentatively ruled that Air Namibia (SW, Windhoek Int’l) has been abusing its market position by setting prices on its trunk Windhoek Int’l-Cape Town route below costs to drive out competitors”.
The daily also reported that “if found guilty, Air Namibia would face a penalty up to 10% of its global annual revenue”.
“The aligning of Air Namibia’s prices below its costs is abusive, regardless of whether Air Namibia’s pricing was meant at matching the pricing of its competitors. Air Namibia’s pricing conduct is, therefore, anti-competitive, and has stifled innovation and decreased consumer choice,” the NCC said.
Air Namibia responds
Air Namibia’s Twalulwa Kayofa has flatly reused that they are subsidizing tickets to keep prices lower.
Kayofa said their pricing is based on normal market forces of demand and supply.
In fact, the perception out there is that Air Namibia is a very expensive airline.
This statement is contradictory to what we are really are in the in the market, be it long haul airlines or those in the region. Our fares are merely competitive and in line,” said Kayofa.
Air Namibia has bluntly rejected that they have been enabling a monopoly saying Namibia remains an open market.
“There are 3 to 4 airlines from South Africa operating into Namibia as an example. So we do not see where the monopoly referred to is.
To make things worse, these airlines are by far all much bigger in size and resources than Air Namibia, so we cannot be practicing predatory pricing when in fact we are small than them.
The air service agreements in terms of which we operate include a section on unfair competition, which is well regulated, and we ensure at all times that we comply,” said Kayofa.
Air Namibia confirmed that the matter of Airlink was indeed before the competition commission.
“We are confident that there has not been any predatory pricing practiced on our part, all facts have been submitted for their review, and we are sure the commission will clear us of this allegation.
We also are fully aware of players in the market who want to use unfair tricks to dis-credit the airline, this is very unfortunate on their side,” said Kayofa.
By Megameno Shikwambi