
The Air Services Licensing Council (ASLC) of South Africa has declared that FlySafair’s ownership structure is in breach of local regulations.
The Air Services Licensing Act maintains that domestic airlines must have at least 75% South African ownership.
However, the ASLC has determined that the Irish ASL Aviation Group holds 74.86% of FlySafair shares, therefore making it the airline’s majority shareholder.
This means FlySafair’s ownership structure violates South African and international air services licensing regulations.
The nation’s biggest carrier thus faces penalties such as being barred from operating in the country.
FlySafair operates an estimated 60% of domestic flights which can go as high as 160 flights daily.
The fear is therefore that, should FlySafair be barred from operating in South Africa, even if just temporarily, it would overwhelm the existing airlines and leave many travellers without options.
Additionally, with higher levels of demand and significantly less supply, the removal of FlySafair would likely drive ticket prices to astronomical levels.
FlySafair has furthermore highlighted that its suspension could lead to several job losses in the aviation industry given its extensive footprint in this sector and the number of people involved in its operations, whether directly or indirectly.
Less travelling will also hurt the tourism industry which is still recovering from the Covid-19 pandemic when movement across borders was strictly controlled.
This could have a knock-on effect on the economy given that tourism is one of the country’s biggest revenue generators.
A reinterpretation of the law
FlySafair spokesperson Kirby Gordon told eNCA that the regulations haven’t changed with regard to airline ownership in South Africa, rather, the ASLC’s interpretation of the regulations have changed.
“What we’re looking at is not actually so much changes in the regulation and rather just a reinterpretation of existing regulation,” said Gordon.
As it exists within the Air Services Licensing Act, there are provisions known as the Nationality Provisions which dictate the degree to which an airline may or may not be controlled through voting rights by an entity that is not based in South Africa.
“The wording there in the domestic instance actually says that 75% of voting rights need to be held by residents of the Republic, and it does go on to give instances of what this would look like outside of the ownership by natural persons, but the recent interpretation by the Air Services Licensing Council is a far more narrow one,” said Gordon.
“At this stage, they are saying that they do not see fit that a trust or a company as such may actually be an owner of an airline and have resident members controlling the voting rights within those entities, rather they believe that airlines need to actually be owned by natural persons, warm-blooded human beings like you and I, in their personal capacity, which of course calls into question not only FlySafair but a number of other airlines in South Africa who are not owned by individuals.”
He highlighted that one would need to be in the top 1% of the top 1% to have the funds available to own and fund an airline in your personal capacity, something very few individuals in South Africa are capable of.
FlySafair has thus requested an exemption from these legal provisions from Minister of Transport Barbara Creecy while its court applications are being reviewed. Creecy’s ministry has confirmed receipt of the request but has made no comment on it.
Should the ASLC’s view of the regulations be upheld, not only FlySafair but several other airlines in South Africa could be impacted, which could have a dire effect on the country’s aviation industry.
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