Competition Tribunal Hears Evidence of SA Airlink Overstating Assets in Pricing Case

The Competition Tribunal has heard fresh evidence in the excessive and predatory pricing case against SA Airlink. Economic expert for the Competition Commission, Jason Aproskie, testified that the airline overstated the value of its assets by using a method known as gross replacement value. It is the full cost required to replace an asset with a new equivalent, including costs like purchase price, delivery, installation and other associated expenses.

Aproskie argues that this approach inflated the costs that any new competitor would face when trying to enter the market. This would have the effect of allowing Airlink, as the incumbent, to benefit from higher ticket prices and excess profits. The latest economic testimony follows earlier submissions from factual and financial experts. Airlink faces prosecution after the Competition Commission investigated three complaints relating to its pricing conduct on the Johannesburg-Mthatha route between September 2012 and August 2016.

Resumption of a Long-Running Case

In a case that has dragged on for nearly a decade, the Competition Tribunal in Pretoria resumed hearings into allegations of excessive and predatory pricing against SA Airlink on 22 September 2025. The matter, which centres on the airline’s operations on the Johannesburg to Mthatha route, stems from complaints lodged with the Competition Commission in 2016 and 2017. These complaints accused Airlink of engaging in anti-competitive behaviour that drove up airfares for passengers while squeezing out smaller rivals. The tribunal, an independent body responsible for adjudicating competition disputes, is now in the phase of hearing economic expert evidence after earlier sessions focused on factual witnesses and financial analysis.

The hearings, which began in August 2023 and were postponed multiple times due to procedural issues and the need for additional expert reports, are expected to conclude within the next few weeks. Airlink, South Africa’s largest independent airline with a fleet of over 60 aircraft and operations across Africa, has vehemently denied the allegations, arguing that its pricing was market-driven and not intended to harm competition. The airline’s legal team has cross-examined witnesses, including Aproskie, to challenge the Commission’s claims. If found guilty, Airlink could face penalties of up to 10% of its annual turnover for the relevant period, potentially amounting to hundreds of millions of rands, along with orders to adjust its pricing practices.

This resumption comes at a time when South Africa’s aviation sector is still recovering from the COVID-19 pandemic’s impact, which saw passenger numbers plummet by 80% in 2020 and led to the collapse of carriers like Comair. The case highlights broader concerns about market dominance in domestic routes, where Airlink controls a significant share, especially in underserved areas like the Eastern Cape.

Jason Aproskie’s Testimony: Overstated Assets and Inflated Barriers

At the heart of the fresh evidence is the testimony of Jason Aproskie, an experienced economic consultant specialising in competition matters. Aproskie, who has provided expert analysis in numerous tribunal cases, including those involving mergers in the telecoms and banking sectors, argued that Airlink’s use of the gross replacement value method artificially inflated its reported costs. This method calculates the full expense of replacing an asset from scratch, factoring in not just the purchase price but also delivery, installation, and other incidental costs. While commonly used in insurance valuations, Aproskie contended it is inappropriate for assessing competitive entry barriers in aviation.

By overstating asset values—such as aircraft, ground equipment, and route infrastructure—Airlink created a distorted picture of the capital required for new entrants to compete on the Johannesburg-Mthatha route. “Aproskie argues that this approach inflated the costs that any new competitor would face when trying to enter the market,” as detailed in his report. This inflation, he explained, allowed Airlink to justify higher ticket prices, leading to “excess profits” that deterred competition and harmed consumers, particularly in Mthatha, a rural town reliant on affordable air travel for business and family connections.

Aproskie’s analysis drew on financial data from Airlink’s submissions, comparing it to industry benchmarks. He highlighted how this methodology ignored depreciation and actual market values, making entry appear prohibitively expensive. For instance, a competitor like the now-defunct Fly Blue Crane would have faced perceived barriers far higher than reality, contributing to its exit from the market in January 2017 after just months of operation. Cross-examination by Airlink’s counsel focused on whether alternative valuation methods, like net book value, would yield similar results, but Aproskie maintained that gross replacement overstated by up to 50% in some cases.

His testimony builds on earlier evidence from factual witnesses, including former Fly Blue Crane executives who described how Airlink slashed fares below cost during their entry, only to hike them once the rival folded. Financial experts previously testified on Airlink’s profit margins, showing averages of 20-30% on the route—double the industry norm—suggesting predatory intent.

Historical Context: Complaints and Investigation

The case originated from three separate complaints filed with the Competition Commission between 2016 and 2017. The first came from Fly Blue Crane, a low-cost carrier that launched services on the Johannesburg-Mthatha route in September 2016 to challenge Airlink’s monopoly. Complainants alleged that Airlink responded by dropping fares to unsustainable levels—sometimes as low as R500 return—while maintaining high costs elsewhere, a classic predatory pricing tactic to drive out competition.

Once Fly Blue Crane ceased operations in January 2017 due to financial losses, Airlink allegedly raised prices back to “exorbitant” levels, with one-way tickets exceeding R2,000. This prompted complaints from consumer groups and local businesses in Mthatha, who argued the pricing exploited passengers with limited alternatives. The route, serving the rural Eastern Cape town of Mthatha—home to about 100,000 people and a key hub for government workers and families—saw airfares double post-competition, affecting affordability for ordinary South Africans.

The Commission launched a formal investigation in 2018, gathering data on Airlink’s costs, revenues, and market share. By 2022, it referred the matter to the tribunal, accusing Airlink of violating sections 8(a) and 8(d) of the Competition Act, which prohibit excessive pricing by dominant firms and predatory conduct aimed at excluding rivals. Airlink, holding over 90% market share on the route during the period, was deemed dominant, triggering scrutiny under abuse of dominance provisions.

Delays ensued due to the pandemic, with initial hearings in 2023 focusing on procedural matters. The 2025 resumption marks the evidentiary phase, where experts like Aproskie provide the analytical backbone for the Commission’s case.

Implications for South Africa’s Aviation Industry

If the tribunal rules against Airlink, it could set a precedent for pricing regulation in aviation, a sector where high fixed costs like fuel and maintenance make entry barriers steep. Smaller airlines like CemAir and FlySafair, which have expanded domestically, could benefit from clearer guidelines on competitive pricing. Consumers, especially in underserved routes like Mthatha to Johannesburg—a 1,200km journey taking 10 hours by road—stand to gain from lower fares and more options.

Airlink argues its pricing reflected market dynamics, including fuel price fluctuations and low demand outside peak times. The airline, which operates over 200 daily flights across 45 destinations, claims the Commission’s methodology ignores operational realities, such as high airport fees at OR Tambo and Mthatha. A ruling in its favour could affirm flexibility for incumbents in thin markets.

Broader industry context shows South Africa’s aviation struggling post-COVID, with state-owned SAA still rebuilding after business rescue. Private carriers like Airlink have filled gaps but face accusations of monopolistic practices. The case could influence ongoing probes, like those into ground handling fees at airports.

Economists warn that excessive pricing harms economic growth in regions like the Eastern Cape, where high travel costs stifle tourism and business. Mthatha, birthplace of Nelson Mandela, relies on air links for visitors, but exorbitant fares—sometimes R3,000 one-way—deter travel.

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