The Commission has granted an exemption to South African Airways and (SOC) Ltd (SAA) and Air Mauritius Limited (MK) to form a joint venture (JV) on the Johannesburg (JHB) and Mauritius (MRU) route and other related routes.
The exemption allows the JV collaboration on the network, scheduling, revenue management and distribution across both carriers, thereby enhancing their existing bilateral offering.
In terms of section 10 of the Competition Act, an exemption may be granted if an agreement or practice constitutes a prohibited practice in terms of Chapter 2 of the Act and is found to contribute to either of the following objectives, namely, maintenance or promotion of exports, promotion of the competitiveness of small businesses or firms controlled or owned by historically disadvantaged persons, change in the productive capacity to stop decline in an industry, or economic stability in an industry designated by the Minister.
In terms of the JV, the two airlines will align their economic incentives by pooling the revenue and costs associated with the provision of commercial passenger and cargo services on the trunk route between Mauritius and Johannesburg, and the behind and beyond destinations.
Further, these airlines will synchronize passenger and cargo capacity, expand their joint networks, access new markets (which may not have been economically feasible in the past) and deliver consumer benefits and create efficiencies that would not be possible without the proposed joint venture arrangement.
The exemption has been granted as it achieves the objectives set out in section 10 (3)(b) of the Competition Act, primarily as the cooperation between the two airlines will promote exports from South Africa.
The two airlines will compete more effectively in the global market by using the JNB-MRU trunk route as the platform, and as such greater benefits are expected to flow to destinations behind and beyond the JNB-MRU trunk route.
It is expected that the JV will equally benefit the South African economy as it will lead to increased foreign currency earnings, improved capacity utilisation and employment in fulfilment of some of the objectives of the Act through increased passenger numbers, increased cargo capacity and increasing the route network in new markets.
The exemption has been granted for a period of five years.