DA to refer SAA to Competition Commission for collusion with Mango 

13 June 2016

The DA will request that the Competition Commission launch a full-scale investigation into the alleged collusion between SAA and Mango Airliners that has seen the latter being able to offer drastically discounted flights through subleasing of aircraft at discounted rates by SAA. 

This effectively means that both Mango and SAA have been losing money and that Mango’s “good story” is a farce paid for by the South African public. 

We will ask the Commission to table its report in Parliament after including in their investigation:

- The benefits and possible kickbacks for SAA in leasing aircraft to Mango;

- The total cost to taxpayers due to this arrangement;

- The entire lease period and the terms of lease offered to Mango; and

- The total amount of losses to SAA attributed to the subleasing agreement. 

In a statement on Saturday, SAA has confirmed and admitted after a near-decade of denials that it was assisting Mango through subleasing aircraft at discounted prices. This has allowed Mango to offer flight tickets at rates below operational cost. This is uncompetitive and detrimental to other airliners, who eventually will be priced out of the market and be forced into bankruptcy and closure. According to Comair, 10 out of the 11 independent, private airlines launched in South Africa since deregulation in 1991, have now failed, leaving only kulula.com and British Airways (both operated by Comair) remaining in our skies. 

The Competition Commission is empowered to investigate this matter as stipulated in the preamble of the Competition Act of 1998. 

The Commission is mandated to “investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy. Its purpose is to promote and maintain competition in South Africa in order to:

- Promote the efficiency, adaptability and development of the economy; Provide consumers with competitive prices and product choices; Promote employment and advance the social and economic welfare of South Africans.” 

The fact that Mango’s entire fleet of aircraft is comprised of SAA subleased aircraft  diminishes from the success story at Mango and exposes why SAA has incurred R18 billion worth of losses thus far and has cost the taxpayer R14.4 billion in government guarantees. 

We cannot allow SAA and Mango to undermine Treasury’s calls for stringent spending and austerity in order to keep up appearances at taxpayers expense. 

The loss-incurring subleasing arrangement between these two airlines is the exact reason why we believe SAA should be privatised. The DA’s plan for the privatisation of SAA will bring about the following efficient outcomes:

- The introduction of capital, technology and managerial expertise that SAA lacks under current Chairperson, Dudu Myeni.

- The private sector is more resourceful than the public sector and will ensure the provision of high-quality services/goods that is not.

- The promotion of competition, which puts pressure on the private sector to be more efficient and viable.

- The potential to promote wider share ownership among employees and the public.

- It will make more capital available for economic development, internal investment, job promotion and infrastructural improvements. 

We need SAA to be held accountable for all negligent spending of state funds, it is time for all South Africans to be put first and the DA will ensure this is the case as with all government spending. 

Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 13 June 2016