Privately owned South African airline CemAir has challenged the pending sale of FlySafair to Harith Aviation, and called on the Competition Tribunal to prohibit the transaction.
The acquisition has been in advanced stages for some time, which was confirmed by Harith as far back as February this year, following productive talks with FlySafair’s Irish owner, ASL Aviation Holdings.
Representing CemAir, advocate Dwight Snyman noted concerns over potential overlapping ownership interests arising from the sale.
He explained that Harith currently holds a 37.5% ownership stake in the privately owned Lanseria International Airport, with the rest controlled by the Government Employees Pension Fund (GEPF), represented by the state-owned Public Investment Corporation (PIC).
Snyman warned that the overlap could cause an inadvertent exchange of sensitive commercial information, especially since the PIC holds a 30% shareholding in Harith General Partners.
According to the advocate, this could lead to FlySafair gaining an anti-competitive advantage through common interests at Lanseria International Airport, where it is based.
He added that the merger could also soften competition between Lanseria and airports owned by the Airports Company South Africa (ACSA), in which the PIC holds a 20% stake.
Harith agreed to purchase the airline after it faced regulatory scrutiny over its ownership structure, since domestic airlines were required to be at least 75% South African-owned.
It was found that ASL Aviation Holdings effectively controlled 74.86% of the airline through a trust arrangement, prompting the sale, which the Competition Commission approved last month on certain conditions.
Some of these include regulated information exchange and ensuring goods and services provided to other airlines at Lanseria are not offered on unfair terms.
In response, the Competition Commission told CemAir that the terms had been agreed to and that the PIC would hold only minimal indirect interest in FlySafair.
The Competition Tribunal reserved its approval following the hearings and will communicate its decision at a later date.
Cabin crew jobs on the line
Besides CemAir’s anti-competition concerns, other aviation stakeholders have also raised concerns before the tribunal, including the South African Cabin Crew Association (SACCA).
According to the union, which represents a majority of FlySafair’s cabin staff, the airline did not consult it before announcing the acquisition.
It did mention that it would still support the sale, as long as it does not result in the retrenchment of any of the airline’s staff.
In an interview with Newzroom Afrika, SACCA president Christopher Shabangu said the union appealed to the Competition Commission to protect FlySafair’s workers.
“What that deals with is if the merger takes place, there wouldn’t be any changes with regard to the contracts of the workers,” Shabangu said.
“There wouldn’t be any material changes to the workers’ working conditions, and there wouldn’t be any implied retrenchments related to the merger.”
Shabangu explained that in an implied retrenchment, a company uses a merger opportunity to replace permanent employees with temporary workers.
CH-Aviation reported that FlySafair Operations CFO Pieter Richards has confirmed that no pre-merger retrenchments would take place.
Shabangu noted that SACCA does not see that Harith’s stake in Lanseria would cause conflicts of interest, and is not concerned about how it is funded.
He added that SACCA supports a locally owned FlySafair and would fully back Harith Aviation in the acquisition.
“For me, it looks positive. It looks like a done deal, besides a few things that they need to maybe clarify to the Commission,” Shabangu said.
“It would seem they have answers to those questions. It might have just been a question of logistics, but as far as we’ve assessed the process today, it looks like it’s going well.”
Loading ...
