South African domestic aviation industry under scrutiny from parliamentary committee

Andrew Attieh and Mark Thomas, competition law experts at Pinsent Masons, were commenting after the parliamentary Portfolio Committee on Trade, Industry and Competition and the Portfolio Committee on Transport convened a meeting this month, with various stakeholders in the aviation industry, to discuss price control and regulation in the domestic low-cost industry

Various regulators and branches of government were in attendance at the briefing, including the National Consumer Commission, the Competition Commission, the Department of Trade, Industry and Competition, the Department of Transport, the South African Aviation Authority and Airports Company of South Africa. The discussions centred on various issues facing consumers in the low-cost airline industry, such as overbooking, overpricing, and the lack of competition on low-frequency routes.

Attieh said: “A parliamentary inquiry could lead to changes in how the domestic low-cost airline industry in South Africa is regulated. However, what shape the inquiry will take, or the reforms that will be recommended, remain unclear.”

The committees heard from the Competition Commission who said that whilst there was significant competition in the airline market before the Covid-19 pandemic, they had noticed a post-pandemic shift in the market, with only one dominant airline in the low-cost market. This concentration raises concerns about reduced competition and its impact on consumers.

On the consumer protection front, one of the critical issues highlighted was the practice of overbooking. The National Consumer Commission noted that it was investigating allegations into overbooking following receipt of numerous complaints from the public and encouraged members of the public to come forward with any further overbooking experiences.

Earlier this year, FlySafair came under scrutiny for admitting that it intentionally overbooks flights, but that this was a worldwide industry practice. The admissions followed multiple complaints on social media with people stating they had been bumped from their flights on their return journeys after the festive period.

“The meeting has set the stage for critical discussions on the future of the sector. The committee’s scrutiny of the low-cost airline industry marks a crucial step towards enhancing consumer protection and fostering a competitive market, with the possible parliamentary inquiry likely to inform future regulatory actions,” said Thomas.

The portfolio committees’ investigations mark a growing trend in the intersection between consumer protection law and competition law, which has been the subject of recent legislative changes in both the United Kingdom and the European Union.