Deanw
29th Sep 2005, 11:01
SAA is still offering incentives to agents
September 29, 2005
By Ann Crotty
Johannesburg - SAA has confirmed that it is continuing to offer override incentives to travel agents despite the fact that these incentives were prohibited by the competition tribunal ruling earlier this year.
Industry sources said this week that changes made a few months ago to the level of flat commission offered by SAA had made the override incentives considerably more effective in excluding SAA's competitors, such as Comair and Nationwide, from the market.
In terms of SAA's incentive scheme, travel agents are offered a flat 1 percent on all SAA business sold up to a predetermined target.
Once the travel agent achieves that target, all the SAA business sold by the agent receives a 7 percent commission.
In July the tribunal ruled, in a case that had been brought by the competition commission on behalf of Nationwide Airlines, that SAA had abused its position of dominance by offering override incentives to travel agents that "gave travel agents a compelling incentive to sell tickets of SAA in preference to that of its rivals".
In the Nationwide case, Norman Manoim, who presided over the matter, described SAA as "operating at the cusp of legality" and said that it appeared the national airline was not prepared to abandon the incentive scheme "despite the serious questions over its legality".
He imposed the largest fine in the history of the Competition Act on SAA for the use of what he described as "an objectionable" incentive scheme. The scheme was designed to encourage travel agents to sell SAA tickets to their customers regardless of what was being offered by other airlines such as Nationwide and BA/Comair.
Manoim described SAA's behaviour as "irresponsible" and said that the airline "should have been more alert to the fact that from international developments its conduct was at least in the twilight zone of legality". SAA has appealed the tribunal's ruling.
At no stage during the hearing did SAA indicate that it would terminate the override incentives and it was not ordered to do so by the tribunal.
Although the tribunal declared that during the period specified in the case, which was October 1999 to May 2001, the incentive scheme was a prohibitive practice, it did not interdict SAA from continuing with it.
In an affidavit to the tribunal, the former chief executive of SAA, Andre Viljoen, said that the details of the scheme had been altered.
Business Report
September 29, 2005
By Ann Crotty
Johannesburg - SAA has confirmed that it is continuing to offer override incentives to travel agents despite the fact that these incentives were prohibited by the competition tribunal ruling earlier this year.
Industry sources said this week that changes made a few months ago to the level of flat commission offered by SAA had made the override incentives considerably more effective in excluding SAA's competitors, such as Comair and Nationwide, from the market.
In terms of SAA's incentive scheme, travel agents are offered a flat 1 percent on all SAA business sold up to a predetermined target.
Once the travel agent achieves that target, all the SAA business sold by the agent receives a 7 percent commission.
In July the tribunal ruled, in a case that had been brought by the competition commission on behalf of Nationwide Airlines, that SAA had abused its position of dominance by offering override incentives to travel agents that "gave travel agents a compelling incentive to sell tickets of SAA in preference to that of its rivals".
In the Nationwide case, Norman Manoim, who presided over the matter, described SAA as "operating at the cusp of legality" and said that it appeared the national airline was not prepared to abandon the incentive scheme "despite the serious questions over its legality".
He imposed the largest fine in the history of the Competition Act on SAA for the use of what he described as "an objectionable" incentive scheme. The scheme was designed to encourage travel agents to sell SAA tickets to their customers regardless of what was being offered by other airlines such as Nationwide and BA/Comair.
Manoim described SAA's behaviour as "irresponsible" and said that the airline "should have been more alert to the fact that from international developments its conduct was at least in the twilight zone of legality". SAA has appealed the tribunal's ruling.
At no stage during the hearing did SAA indicate that it would terminate the override incentives and it was not ordered to do so by the tribunal.
Although the tribunal declared that during the period specified in the case, which was October 1999 to May 2001, the incentive scheme was a prohibitive practice, it did not interdict SAA from continuing with it.
In an affidavit to the tribunal, the former chief executive of SAA, Andre Viljoen, said that the details of the scheme had been altered.
Business Report