High airline ticket prices in South Africa to be investigated

The Competition Commission plans to conduct a market inquiry into carriers like FlySafair and CemAir for exorbitant flight prices.

This was revealed in a media engagement with the four chairpersons of the National Assembly oversight committees belonging to the Economics Cluster.

This included Parliament’s Trade, Industry and Competition Committee chairperson, Mzwandile Masina, who explained why a Competition Commission inquiry into this matter may be necessary.

He explained that some budget airlines initially entered the market as low-cost carriers, displacing South African Airways (SAA). 

However, when issues arose, they transitioned into commercial airlines, and their prices became “exorbitant”.

“They are not affordable to our people, so we will need to do a market inquiry to ensure that there is fairness and our people can move from province to province and elsewhere,” he said.

When asked which airlines he was referring to, Masina identified airlines like FlySafair, CemAir, and others that were introduced as budget carriers, similar to Mango.

He said these airlines initially positioned themselves as budget options but have evolved.

For example, Airlink, which has operated as a regional airline for over 30 years, also expanded into mainstream routes following SAA’s challenges. 

He said a market enquiry would address two key concerns:  

• The pricing and practices of these airlines.  
• The impact of Airlink operating on routes traditionally served by SAA, such as Cape Town to Johannesburg, as well as routes to smaller destinations like Kimberley, Nelspruit, Pietermaritzburg, and others.  

Masina said the committee plans to approach the Competition Commission through the Trade, Industry and Competition Minister to call for a market inquiry. 

The chairman also mentioned the International Air Services Council’s recent findings on FlySafair, which could result in the airline’s licence being suspended or cancelled.

In November this year, the International Air Services Council (IASC) ruled that FlySafair’s shareholding structure is not compliant with South African law. 

As it stands, an airline operating in South Africa’s domestic space must be “substantially owned” by South African citizens. 

ASL Aviation owns nearly 75% of FlySafair’s shares, directly and through subsidiaries. As an Irish company, it has been deemed a foreign entity by the IASC.  

The inquiry into Flysafair’s shareholding structure began in October 2022 and includes formal complaints by Airlink and Global Aviation, which operates LIFT. 

The IASC has now ruled that FlySafair has contravened and/or failed to comply with provisions of the law in that the company structure comprises 49.86% shareholding by the Safair Investment Trust, which is eventually 100% owned by ASL.

This is in addition to the 25% shareholding that is directly owned by ASL.

The IASC also ruled that FlySafair failed to apply for an amendment of its air service licence when its ownership structure changed in March 2019. The IASC said it would announce a sanction within the next few weeks.

A sanction from the IASC could include cancelling or suspending FlySafair’s aviation licence until its shareholding structure is fixed or fines or penalties are imposed.

FlySafair has clarified that this only affects its international flights, as domestic operations occur under a separate licence. 

The IASC has yet to determine the sanctions it will apply to FlySafair, but the airline has since taken the IASC to court.

It filed an urgent interdict against the ruling that deemed its shareholding structure non-compliant. 

“We have agreed with the chairperson to formally call this entity to brief Parliament on these findings and their implications,” Masina said. 

He said complaints have also come from Airlink and Global Aviation Operations, among others.

Masina also alluded to attempts to block such reports from reaching the public.

“As Parliament, it is crucial for us to play our oversight role to ensure that there’s accountability and a rule of law in the country,” he said.