Johannesburg - The DA would request that the Competition Commission launch a full-scale investigation into the alleged collusion between SAA and its low-cost subsidiary Mango, it said yesterday.
This follows newspaper reports based on a statement on Saturday, in which state-owned carrier SAA confirmed – after a near-decade of denials – it was helping Mango through sub-leasing aircraft at discounted prices.
SAA sub-leased Mango all 10 of its aircraft “at a significantly discounted cost”, while paying the leasing company the market rate, SAA said.
The move was a “necessary investment” to support the low-cost entity, SAA said.
SAA’s comment on sub-leasing planes to Mango comes after last week’s resignation of the budget airline’s chief executive Nico Bezuidenhout, who will become the head of Africa-focused carrier FastJet from August 1.
The company will announce an acting chief executive “as soon as it is practically possible to do so”, and will start a search for a permanent appointment.
The DA said the discount had 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.
“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,” the DA said.
South Africa’s competitive aviation industry has seen a number of airlines collapse, including low-cost carrier Skywise, which is no longer able to operate following its grounding by Airport Company SA over airport fees.
Skywise has previously called on the government to give the company breathing space, in the same manner it was treating SAA. Skywise could not be reached for comment yesterday.
Court challenge
This comes as low-cost competitor Comair is in a high court challenge with SAA and the government over the state funding of the embattled national carrier.
The DA said it would ask the commission to table its report in Parliament after including it 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 promotion of competition, which puts pressure on the private sector to be more efficient and viable.
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