Are Mango/SAA playing fair ?

23 Feb 2008

In Comair's interim results to 31 December 2007 they said that their good results were "despite continued unprofitable pricing by our state-owned competitors" The state-owned competitors which Comair are referring to are Mango Airline and SAA, South African Airways; which are both owned by you and me and every other South African taxpayer - even Comair's tax Rand go towards SAA & Mango Airline. While we at SouthAfrica.TO agree that it is not ideal having tax money subsidising the travelling habits of the wealthy, our evidence shows that Nationwide Airline, rather than Mango Airline or SAA, has been at the forefront of low pricing in South Africa.

No evidence of underpricing in 2006

Looking at the losses SAA made in 2006, one at first gains the impression that Comair's allegations of underpricing ring true. However, digging a little deeper one can see that SAA made a profit of R100m on domestic South African flights in 2006 - so certainly in the domestic market they were pricing strongly enough (and this is predominantly the market within which Comair - Kulula / British Airways South Africa - are operating). Kulula also operates some flights from South Africa into the rest of Africa, and SAA was also profitable in that area (R500m profit in 2006). Unfortuanately SAA does not report the results for Mango seperately, so it's difficult to see whether it priced unprofitably for its low cost carrier. (SouthAfrica.TO is of the view that all state carriers should be required to show details of their balance sheet and profit and loss accounts).

The last year

We don't have details of SAA and Mango's financial results for 2007, but we can look at our bank of pricing surveys to see who's been pricing the lowest. Out of the 45 flight surveys we have carried out over the last year, SAA have never offered the cheapest flight price (so they're certainly cant be accused of underpricing on the low-end of the market). Mango Airline offered the cheapest flight price 24% of the time, which also is hardly the behaviour of an airline at the forefront of "unprofitable pricing" practices.

How often were they cheapest over the last year?
1time airline	British Airways	Kulula	Mango Airline	Nationwide airline	SAA
13%	7%	11%	24%	44%	0%

Nationwide Airline's low pricing

If any airline can be accused of pricing on the low end, it's Nationwide Airline, which over the last year has offered the lowest flight prices 44% of the time. Nationwide is privately owned.