Nationwide vs SAA

[Pontius' Pilot]

Found this in Online Business Report:

Nationwide's complaint against SAA at long last to be heard
August 16, 2004

By Ann Crotty

Johannesburg - SAA is scheduled to appear before the competition tribunal this week in a case that was originally brought to the competition authorities in April 2000.

The case, brought by Nationwide, has made history as it marks the longest delay between the date of initial filing and an appearance before the tribunal.

The case relates to the incentives that SAA, a dominant carrier, provides to travel agents.

The delaying tactics used by SAA appear to be motivated by the hefty penalties the airline faces if the tribunal finds against it.

The competition commission, which has referred the matter to the tribunal after investigating Nationwide's complaints, has requested that the tribunal impose an administrative penalty on SAA of 10 percent of turnover plus interest to the date of payment.

The commission has also requested the tribunal to order that the incentive scheme is an abuse of dominance in terms of the act and to declare all agreements with travel agents void.

The case was originally lodged with the tribunal in 2001 but was held up due to review proceedings taken to the high court as well as the hearing of various interlocutory applications.

The proceedings, which kick off today and are scheduled to run for the week, will be the first time that the tribunal hears arguments relating to the substance of the case brought by Nationwide against SAA.

The tribunal was due to hear the case in April this year but those proceedings were postponed when SAA decided to appeal a tribunal decision to the competition appeal court.


The tribunal's decision related to SAA's application for a postponement of the case so that a similar case brought against SAA by Comair would be consolidated and heard simultaneously with the Nationwide case.

As the Comair case had only been filed with the commission in October last year, a consolidation of the two cases would have involved a further considerable delay.

The appeal court, therefore, dismissed SAA's application.

After investigating Nationwide's complaint, the commission referred the matter to the tribunal.

It made the referral on the grounds that SAA, a dominant firm, was offering incentive commissions to travel agents, as well as incentives to travel agent consultants in the form of travel bonuses, in contravention of the Competition Act.

In April, SAA's legal team notified the tribunal of its intention to further delay the matter.

At that point, the extent of the commission's frustration became more than apparent.

Counsel for the commission remarked: "If this hearing is postponed now, then SAA will be able to postpone it for years and years.

"It has got to the stage that these heads of arguments will have to be bequeathed to my six-year-old son for him to argue."

[PAXboy]

It's funny how each dominant carrier tries out the tricks that other dominant carriers have tried before them. :rolleyes:

These are old hat tricks in Europe and America, so try and see what tricks our bunch are doing today and then see how long it is before your bunch are doing them. :(

--------------------
"I tell you, we are here on Earth to fart around, and don't let anybody tell you any different." Kurt Vonnegut, Jr.

[Pontius' Pilot]

Also from Online Business Report

Travel agents under the whip
August 17, 2004

By Ann Crotty

Johannesburg - The competition commission has asked that national carrier SAA be fined as much as R200 million following alleged abuse of its monopoly position.

On day one of a case that will continue for the rest of the week, the competition tribunal heard yesterday how travel agents were told to challenge the sale of all tickets on "non-preferred" airlines such as Nationwide.

The tribunal also heard how travel agents were selling SAA tickets to customers when they knew there were cheaper tickets available for the same journey from Comair.

Travel agents that came under the incentive spotlight at yesterday's proceedings include Seekers, Sure Travel, American Express Travel, Tourvest and Rennies Travel.

The case was referred to the tribunal by the commission in 2001.

The commission alleges that SAA, a dominant firm, is offering incentive commissions to travel agents as well as incentives to travel agent consultants in the form of travel bonuses, in contravention of the Competition Act.

The incentives involve a basic 7 percent on all ticket sales and additional "override" incentives, which represent a significant bonus for travel agents who meet targets.

In addition, SAA offers incentives to consultants in terms of the Explorer Scheme.

The commission has requested that the tribunal orders the incentive scheme an abuse of dominance and also that the tribunal imposes a penalty on SAA of 10 percent of turnover on affected sales.

This penalty could amount to as much as R200 million.

However, SAA's legal counsel is arguing that the travel agents do not have the power to influence the consumers' choice of airline and incentives are not an abuse of dominance.


The case was brought to the commission in 2000 by Nationwide, which alleged a falloff in its sales growth in 2000 was attributable to the incentives offered to travel agents by SAA.

From its inception in 1995 until 1998, Nationwide had strong growth. From 1998 to early 2000 that growth was described by its chief executive, Vernon Bricknell, as phenomenal.

Yesterday's hearing referred to an internal memo from William Puk of Sure Travel dated December 11 2001, which stated Sure Travel was "still giving too much of our domestic business to Nationwide.

We cannot hope to keep both SAA and BA/Comair satisfied if we can give a non-preferred so much business [R40 million]."

Puk acknowledged the "very competitive pricing policy of Nationwide" and noted that Nationwide had signed up override incentive deals with some Sure Travel members.

"Members who are receiving an override from Nationwide are an embarrassment and liability to our group," the memo said.

It urged travel agents to reinforce the commitment to SAA with their staff "and challenge all sales on non-preferreds".

Comair commercial director Erik Venter, who was questioned at yesterday's hearing, also gave evidence that Comair's sales through travel agents had fallen off significantly from mid-2000.

Venter stated that Comair's investigations had revealed that travel agents were selling SAA tickets at higher prices than those available from Comair

[B Sousa]

"Johannesburg - The competition commission has asked that national carrier SAA be fined as much as R200 million following alleged abuse of its monopoly position."

Ok, the airline gets fined. The Money come from the Government, goes to the Governemnt, disappears and where are you.....Back to Square One..........

[Jangys]

Looks like "VP Nationwide" is not making enough money. Just looking for an excuse to procure some more. Maybe to pay for the next Boeing on order......:E

[orgasmotron]

About time. Times are gone where the governments funds a non-profitable airline or any venture in direct competition and to the detriment of financially sound smaller airlines or industries. Well done Nationwide. Look what happened to old blue tail Sunair. SAA keeps on dropping tickets and starting price wars with smaller airlines without themselves making a profit. What a joke.

Mind you, just listen to the arrogance of some of the "Special Attention Airways" crews on the RT and it all makes sense.

[contraxdog]

I thought it was Singapour Ailine Academy

[Goldfish Jack]

Send Another Airbus

[Pontius' Pilot]

A few days old but nevertheless an update:

SAA incentives were essential - Viljoen
August 23, 2004

By Ann Crotty

Johannesburg - In mid-1998 SAA used physicians with fruit baskets to visit the homes of employees who had taken sick leave after receiving their monthly pay.

"Often they were not found at home, they were found at shopping malls," SAA's outgoing chief executive, Andre Viljoen, told the competition tribunal on Friday.

In mid-1998, Viljoen said, SAA's management found that it was losing market share and needed to take action to turn the airline around.

Action had been initiated on a variety of fronts, including dealing with the high level of absenteeism, which Viljoen said had been a contributor to the national carrier's "dismal on-time performance" at that stage.

"We would have between 30 percent and 40 percent absentee rate on the day after a major concert and many employees wouldn't turn up for work for three or four days after they were paid. They went shopping instead," he said.

Physicians were used to check up on employees in these circumstances.

Other areas targeted for attention included the need to develop networks with other international airlines; ensure more international passengers were connected to SAA's domestic flights; improve revenue management so each flight would generate higher profit; take forward cover on plane costs and the cost of fuel; and overhaul SAA sales functions.

The overhaul of the sales functions included a close analysis of the payments made to travel agents.

Viljoen said these payments represented significant amounts and were one of the few variables in the airline's cost structure. He said airlines across the globe had been attacking these commissions.


It was under these circumstances that SAA management decided to reduce the basic commission paid to travel agents and increase incentives paid on achieving set targets.

It is these incentives that are the subject of the competition commission's case against the airline.

Viljoen was giving evidence on the fifth day of the tribunal's hearing into the commission's allegations that SAA's incentive commissions to travel agents and consultants contravened the Competition Act because they represented an abuse of its dominant position in the market.

Viljoen said SAA did not have market power and was not dominant in the market segment that was the subject of the commission's case.

The commission's case against SAA hinges on whether the airline is dominant or has market power and, if so, whether the incentives it provides to travel agents do indeed influence their behaviour to the detriment of other airlines.

In terms of the Competition Act a firm is dominant if it has at least 45 percent of a particular market or if it has market power.

Market power means the power of a company to control prices, to exclude competition or to behave independently of its competitors, customers or suppliers. Viljoen told the hearing that SAA did not have the power to do any of this.

The hearing was adjourned and will reconvene at a date that has yet to be arranged.

[126.9]

Bah humbug!

Why don't we all run around like headless chickens slagging our National Carriers off? Nothing but a flock of sheep we are; conform to whatever the hell the rest of the idiots around us are doing. Even better; let's all take action against our descent airlines to force them out of business so that two-bit, second-rate, cheap-skate airlines! like Nationwide can carry our flag abroad? Not only that; then we all go and fly for Vernon and Co. on his semi-serviceable heaps of sh:mad:t that nobody else wants, for peanuts! Great farging idea!!! :yuk:

[The Claw]

If SAA was as half as good as you think, then they shouldn't need to resort to dirty tricks !

If it wasn't for the corrupt system in place, more of us would still be employed and less of the profits would go to oversea's carriers.

[Leftpedal]

what are you on 126.9? Are you suggesting that we should be conned by national airlines simply because they "fly the flag"? I think it was George Bernard Shaw who said, "patriotism is the last refuge of the scoundrel".
And when you describe SAA as a "descent airline" are you referring to their profits?

[126.9]

...I think it was George Bernard Shaw who said...

Think again. Think Samuel Johnson this time, and you might come across as at least semi-intelligent in your bid to insult me.

Are you suggesting that we...

No. You did that. I merely suggested the philosophy of KYLIE MINOGUE: "better the devil you know."

when you describe SAA as a "descent airline" are you...

Once again: NO! You did that. I was referring to the fact that they don't work their crews well beyond maximum flight and duty regs, do pay their crews the agreed package on time, don't require aircraft to fly with illegal MEL items, don't fire crews for sticking within the law, do allow holiday and leave, do roster sufficient rest and days off, do provide a pension and medical scheme, don't do midnight callouts to off duty crew, do provide a career and future to the largest group of South African pilots anywhere in the world etc, etc, etc! (Getting the picture yet?)

And finally:

I think it was ME! who said: there are none so sour as those that never made it into Airways!

[putco]

Hi 126.9

l never made it into SAA - l'm not in the least bit sour, quite the opposite actually.

[Leftpedal]

As a helicopter pilot I can assure you I have no desire to work on SAA or any other airline. As a resident of South Africa however, I have every desire to avoid being ripped off every I time I fly.

Sorry for confusing Shaw with Johnson (couldn't be bothered to check with Google) - but the validity of the observation remains.

You are a scoundrel. Your defence of SAA's unfair and possibly criminal practices is beneath contempt and speaks volumes about your integrity.

LP

[Solid Rust Twotter]

126.9

I think leftpedal was referring to the fact that you may want to check the spelling of "decent". The context in which you've used it refers to something else.......:E :ok:

[joyrider]

At least Leftpedal comes across as semi-intelligent 126.9! The philosophy of Kylie Minogue eh? You're a deep one aren't you!

[126.9]

joyrider

I'm sorry that the irony went over the top of you! :}

Solid Rust Twotter

I apologise for my multilingual shortcomings. :ugh:

As for the rest of my posting: I stand by it proudly. :ok:

[George Tower]

Getting back to the topic and with no references to the literary world or Kylie Minogue, this comes down to what is fair competition.

The situation where a state run loss maker compete with private companies is in my view unfair. It is like an Olympic athlete that has sacrificed and trained hard for years running in race where the other athletes have taken performance enhancing drugs in the knowledge that they can't be disqualified. i.e. grossly unfair.

Reminds me of an old joke....

At CT international a Comair 737 was taxi-ing for take off behind an SAA aircraft. The SAA captain realised he had fail to complete some checks so asks ATC to accommodate him whilst he gets them done, after about 10 mins the Comair skipper gets on the radio and remarks "Excuse me Sir, but you do know that we have to pay for our fuel" - To which the SAA captain quickly responds " Yes I know, and you pay for ours as well!"

Says it all really, its not about being pro or anti South AFrica or SAA, more about whether you believe in the free market and fairness. I have to say that I do.

[contraxdog]

How does one rate a good airline?
1.Saftey record.
2.Employment conditions?
3.Profitability?
4.Service level?
5.Employment equity?
6.Equipment?
7.Operational standard?
8.Working enviroment?
9.Cabin comfort and food?
10.Ticket pricing?
11.Looks of the cabin crew?
12.Wether the breakfast is value for money?
13.The CEO's young girlfriend?
14.Availability of chicken AND fish?
15.Attitude of the drivers?

Uncle 126.9..
I have never wanted to, never needed to,(I know never is a long time) and Enshalha never will have to work for an airline. I believe a comment like that is derogetory, misinformed, and I hope it was done tongue in the cheek. If not, it would show a sad, sad, skewed view of this wonderful world of aviation myself and hopefully you, are lucky enough to earn our daily ration of mieliepap and boerie from.
Okes like myself and Gunns will take exception to that.
I have always regared all types of aviation with equal respect. I trust, you do to.

To get back to the topic. If measured by the 15 points above The National Airline needs to pull up the stockings. (Strong arm tactics and the nasty stuff was No 18, 19,and 20) Didnt think it would be fair to include them as well.

Who was Mr Johnson you guys were quoting? Dont worry about Kylie... us dogs know that one!

Greetings

Contraxdog..the time has come the walrus said to speak of many things, of pirate ships and sealing wax, and cabbages and kings....

GT,
It reminds me of the Carte blanche article that I saw, about hellcom tonight (sorry telkom).
R400milion( Correct me if Im wrong) Profit amd athough they 1500% MORE expensive than Germany they dont sea any thing wrong with the fact that they are protected by law to be the sole provider........
Makes sense doesnt it?..the time has come the walrus said to speak of many things, of pirate ships and sealing wax, and cabbages and kings....

[Solid Rust Twotter]

A good airline?

How about one that doesn't rely on the taxpayer to bail them out each time they screw up. If they can stand on their own, live or die, I have no problem with them but they can't, can they?

The day they go private as was meant to happen a while back, BA/Comair will be the new national carrier. Can't see SAA surviving in a competetive market unless they lose the govt interference and are allowed to run things as a business.

[The Claw]

126.9, be proud mate :ok:


"Monday, August 30, 2004
SAA limits job creation and tourism industry growth
--------------------------------------------------------------------------------


Comment

The following editorial comment appears in Travel News Weekly being published this week.

A FEW months ago we posed the question in TNW: Can South Africa afford SAA?
Results for the year ending March 2004 released last week show that clearly, we can not. Not in its current form.
Instead of funding its losses over the last two years the government could have built 300 000 houses costing R50 000 each.
Put another way; the government could have paid every SAA employee one million Rand to stay at home and it would still have enough money left over to build them each a R250 000 house!
SAA betted against the Rand. Once described by the airline as a “technical loss”, the humiliation for the government became too great by June this year when a final R5,9 billion was paid to close the position SAA took against the Rand. That will appear in next year’s results.
The growth in loss from R6,2 billion a year ago to R8,7 billion puts SAA into the world class league of failing airlines. Taking its small size into account, it must be the winner by several lengths.
The government has finally reacted and both SAA and holding company Transnet have new chairmen and ceo’s.
Yet the government remains blinded by lack of vision and continues to persist with the quaintly colonial system of trying to run all the country’s ports, pipelines, rail freight, passenger rail and until now, its national airline, out of one head office.
The Soviet Union was the last country to come close to such centralised control of the transport infrastructure. No other modern economy is trying to do the same.
Having played such a key role in dragging the Transnet group down, SAA will be hived off shortly, but it will remain a state enterprise, the minister for public enterprises emphasises.

The state fiddles but the real cost to the country is much more serious. Even if SAA made a few hundred million profit, the real cost is that it has put the ANC in a position that it cannot fulfill its mandate to create jobs in tourism in any number. Instead of bending over backwards to facilitate the widespread entry of leisure-orientated airlines it has to protect its investment in SAA.
LTU is the only leisure airline that operates to South Africa on a regular basis. Eight five percent of its passengers are foreigners bringing money into the country. If we are going to create jobs in real numbers then the government needs to lead the charge to make sure South Africa is attractive for many more flights of this nature.
Someone in government with vision needs to step forward.

SAA does a lot of things right (just try their new flat bed seats, for one example). It should also be noted that the position SAA took against the Rand was in accordance with Transnet policy. Travel agents and the tourism industry want, and depend on, a healthy SAA.
It is inevitable that as other airlines go beyond alliances and seek bigger cost savings through mergers, SAA will have to in any case become part of one of the super airlines that will be formed.
It happened with our national shipping line, Safmarine. Started by the Industrial Development Corporation not too long after SAA, it was a strategic national treasure. Shipping lines started with alliances but found true cost savings only came with mergers. The concept of having a national carrier became an expensive luxury. Today both Safmarine’s employees and South African customers are better off with it being wholly-owned by the world’s largest shipping group based in Denmark.
Cost pressures will force governments to follow the same route with airlines and let them fly free. Hopefully, SAA will end up fully integrated into a properly merged multi-national mega airline.
The government should take the initiative to make sure it is part of such an entity. Meantime, why stifle job creation by trying to protect the concept of a national carrier which is soon to become extinct? Open the skies with enthusiasm and lets put people to work.

(Dave Marsh)"

[126.9]

What are all of you chopper-jocks getting your t|tties in a tangle for? Clearly none of you have applied to SAA and have therefore never not made it into Airways as I said. If you want to take offence at a statement that is aimed at selection failures, be my guest.
---

The article above makes for interesting reading and points it's finger at the culprit openly. Anyone with two-cents worth of brain power picked up on that (I hope)...? Statements such as the following:

the government could have; the humiliation for the government became too great; The government has finally reacted; it will remain a state enterprise; The state fiddles; it cannot fulfill its mandate to create jobs; Someone in government with vision needs to step forward; was in accordance with Transnet and finally, The government should take the initiative to make sure it is part of such an entity. Meantime, why stifle job creation by trying to protect the concept of a national carrier which is soon to become extinct? Open the skies with enthusiasm and lets put people to work,

are a clear indicator as to where the airline problem lies. In the meantime, SAA as a flying institution providing paying passengers with a world-class service, as well as employees with unlimited career opportunities, remains the pride of those of us that have had the privelage of having worked there!

[The Claw]

The "Airline" is clearly the problem, which the government needs to get rid of, rather than continously bailing out!?

You appear to be short of change, old chap.........

[Leftpedal]

Lots of interesting statistics which seem to suggest that SAA could be run far more efficiently than it is. (Yes I know the quote, "lies, damn lies and statistics" but even so....and I STILL can't be bothered to check Google to see who said it)

Anyway, my last word on this thread: SAA is clearly being mismanaged, costing the SA taxpayer (wonder if that includes 126.9?) dearly, and the unethical practices it is alleged to have perpetrated look set to cost us even more in fines. Effective and ethical management would provide secure long term employment for many, in and out of aviation. Now that would be something to be proud of.

[126.9]

For those of you that feel it important to shoot SAA down in it's entireity, try reading the Ryanair/SABENA/Swissair/etc. postings. For me as someone who was employed there and had the privelage of learning my trade there, and the benefit of having worked next to some of the nicest South Africans alive, I'm not about to trash or abandon my ex-colleagues in the name of a p!55!ng contest!

I therefore quote:
---
Bah humbug!

Why don't we all run around like headless chickens slagging our National Carriers off? Nothing but a flock of sheep we are; conform to whatever the hell the rest of the idiots around us are doing. Even better; let's all take action against our descent airlines to force them out of business so that two-bit, second-rate, cheap-skate airlines! like Nationwide can carry our flag abroad? Not only that; then we all go and fly for Vernon and Co. on his semi-serviceable heaps of sh:mad:t that nobody else wants, for peanuts! Great farging idea!!! :yuk:

[The Claw]

126.9

Then have the grace to accept that some other people feel the same about there colleagues and don't start a "p!55!ng contest".

SAA doesn't hold the monopoly on "good" people!?

And stop being so sour because you couldn't get a job at Nationwide............

:} :}

[Bravo Echo November]

At least CE is making money and expanding giving more and more pilot's opportunities to enter the market. People might say that CE is second rate, but they don't need any help from any goverment or tax-paying citizens to keep going!

Take a bow to the man who has taken on the monster SAA! Give Vernon R6 b and see what he will be able to do!

[Togolosie]

So 126.9 has free footing to say what he likes and critisises everybody and every topic, but as soon as someone has something to say mr moderator deletes his post ??

126.9 aka 4holerpoler ?? Wolf in sheeps clothing ??

[Pontius' Pilot]

4HP and 126.9 the same? Certainly not. I know them both - and by the way I flew a lot with 126.9 and he is not a demon. Bark worse than his bite :)

You owe me a beer for that WS. I am waiting in HK for you as I write this.

[The Claw]

Togolosie 4HP was probably hoping this thread would slowly fade away...........


Pontius' Pilot Maybe you could raise a glass to the magnificient achievements of Nationwide, against one sided odds:ok: I'm sure that 126.9 would pay for that round :E

[4HolerPoler]

Me, hoping it would fade away? Nope, I just try to keep the peace.

The idea of me being (no offence old chap) in the same skin as 126.9 is particularly galling but then, as in life, nothing is as it seems.

I try & keep my moderation as fair as possible and avoid interfering as much as possible - I'm sorry if it seems I have a tilt towards a particular side. Can we get back to the subject now?

4HP

[Bravo Echo November]

It is great to be able to talk about problems we have in our various post at various airlines, but we have to remember to stick together, for we are all the same and we all want the same thing-success! Great for you guys who fly for an airline that pays you BIG BUCK. Just remember there might come a time when the small fish becomes the big fish and the old one dies!

[126.9]

Now who's that cheeky bloke that called me 4horsepower? Enough of the personal insults and swearing at me dude!