The Namibian Competition Commission has tentatively ruled that Air Namibia (Windhoek International) has been abusing its market position by setting prices on its trunk Windhoek International-Cape Town International route below costs to drive out competitors, The Namibian has reported.
The finding is preliminary and still subject to appeals both from the carrier and from other affected parties. If found guilty, Air Namibia would face a penalty up to 10% of its global annual revenue. The NCC also has the authority to order the carrier to change its pricing.
"The aligning of Air Namibia's prices below its costs is abusive, regardless of whether Air Namibia's pricing was meant at matching the pricing of its competitors. Air Namibia's pricing conduct is, therefore, anti-competitive, and has stifled innovation and decreased consumer choice," the NCC said.
The NCC further stated that Air Namibia uses state subsidies to effectively engage in price dumping, as it faces no economic incentive to post operating profits.
The ruling comes after South Africa's Airlink (South Africa) (4Z, Johannesburg O.R. Tambo), which has been flying between Windhoek and Cape Town under a franchise agreement with South African Airways since 2014, complained about the alleged anti-competitive practices.
Air Namibia said that it was disappointed by the verdict and would submit oral and written appeals.
A source in the company suggested that the carrier would defend itself by pointing out that it can offer cheaper tickets as it deploys a larger A319-100 on the route, while its competitors uses smaller and higher-cost E135s and E140s.
According to the ch-aviation capacity module, Air Namibia currently flies 21x weekly on the route (including seven flights via Walvis Bay), while Airlink operates 20 roundtrips per week.
