South Africa’s biggest airline under siege

The National Consumer Commission (NCC) has stressed that overbooking and overselling airline flight tickets are illegal in terms of the Consumer Protection Act (CPA) – a practice which FlySafair is currently being investigated over.

Earlier this year, FlySafair landed in hot water for its practice of overbooking flights.

The reasoning behind this was that generally, not everyone who books a flight will show up, and by overselling seats, the airline is able to keep its prices low.

However, there are cases where everyone who booked a specific flight arrives, and not enough seats are available as a result.

When this happens, the airline will offer passengers monetary compensation in exchange for missing their flight.

Some experts have said that this arrangement works well for both the passengers, who can enjoy lower prices, as well as the person who misses their flight, who benefits from the extra cash.

Other people were, however, outraged that a paying customer could lose their plane seat through no fault of their own.

Complicating the matter further, there was some legal grey area surrounding the legitimacy of this practice, since there was contention over whether it violated the CPA.

While some argued that it clearly contravenes the NCA, the Consumer Goods and Services Ombudsman (CGSO) released an advisory note specifically guiding the travel industry on how to navigate overselling and overbooking.

The note states that this practice is common in the travel and lodging industry, and although it is regulated in most countries, it is rarely prohibited.

“The International Air Transport Association (IATA) advocates an approach to passenger rights that strikes a balance between ensuring adequate consumer protection and overburdening the industry with the costs of regulatory compliance,” the Ombudsman said.

FlySafair told Daily Investor, “It’s peculiar that the NCC says that a practice is illegal while the CGSO provides an advisory note on how to manage it.”

In January, the NCC noted concerns regarding incidents of FlySafair overbooking and overselling practices.

On this basis, the NCC initiated an investigation into practices by FlySafair to assess and reviewed its compliance with provisions of the CPA, in particular sections 19(2)(a), 22 (1)(b), 41(1)(a), 47, and 48(1)(b).

Simply put, section 19(2)(a) stipulates that unless a contract says otherwise, it’s assumed that the supplier must deliver goods or perform services on time, at the agreed place, and at their own cost.

Section 22(1)(b) states that if a notice, document, or visual display must be given to a consumer by law, the producer must present it in plain language.

When marketing goods or services, section 41(1)(a) says that a supplier must not, through words or actions, directly or indirectly make any false, misleading, or deceptive claims about important facts.

Section 47 deals specifically with overselling and overbooking, and states that a supplier may not accept payment for goods or services if they have no reasonable basis to supply them as promised.

If they commit to providing goods or services at a specific time and fail to do so due to a lack of stock or capacity, they must refund the consumer with interest and cover any direct costs caused by the breach.

This does not apply if the failure was due to circumstances beyond their control and they informed the consumer promptly.

Importantly, the CPA adds that shortages caused by the supplier’s own negligence are not considered beyond their control.

Suppliers can defend themselves if they offered comparable goods or services and the consumer accepted or unreasonably refused the offer.

Finally, section 48(1)(b) stipulates that a supplier must not market, negotiate, or carry out any transaction for goods or services in a way that is unfair, unreasonable, or unjust.

The NCC established communication with the airline and requested that they share relevant information to kick-start the investigation.

“The NCC will prioritise this investigation given the nature of the allegations,” said Acting Commissioner of the NCC, Hardin Ratshisusu, when the investigation against FlySafair was announced.

“Consumers affected by this practice are urged to come forward and provide information that could assist the investigation.”

Although this investigation is still being finalised, the NCC has come out to say that the practice of overbooking and overselling flights is illegal in terms of the CPA.

Ratshisusu explained on the Kaya Biz podcast that where overbooking and overselling goods or services are concerned, it is clear that the law – under section 47 of the CPA – prohibits these practices.

“If it is found in the investigation that the company has engaged in that practice, in this case, FlySafair, then we will refer it to the National Consumer Tribunal, which will then make a final determination on the matter,” Ratshisusu said.

“The main point is that the act of overbooking or overselling is prohibited. It’s a prohibited practice in terms of the CPA, and there are very limited circumstances where it’s allowed for firms to do that.”

Specifically, these exceptions apply when the firm takes reasonable steps to inform the customer of the shortage, or where the shortage is caused due to unforeseen circumstances.

In a case where a company deliberately sells too many tickets for a flight and is forced to bump customers, these exceptions do not apply.

If and when that occurs, Ratshisusu said that the NCC will consider that as part of their inquiry.

“This is a priority investigation. We intend to finalise it in the next three to six months.”

He said that, currently, the NCC is not looking into other airlines, since other airlines have come out and said that they do not engage in these practices.

This is also a notable point, since one of the defences raised by FlySafair is that overbooking is an industry standard.

“Our investigation is, for now, limited to the conduct of FlySafair because this is the only airline for which we have information that points to this practice.”

“What is left on this issue is for us to investigate and to confirm that indeed this has happened in a number of flights.”

“If that is so, and those circumstances that I’ve explained are not present, then we’ll have to take an appropriate decision on this particular matter.”

Since this matter is being investigated in the public domain, Ratshisusu again called on any consumer with personal experience of overbooking from FlySafair to approach the NCC.

FlySafair told Daily Investor that it would allow the NCC the opportunity to “fully apply themselves to the task and conclude their formal revert” before commenting on the matter further.