South Africa’s biggest airline fights to keep its wings

FlySafair has filed an urgent application for an interdict following a ruling from the International Air Services Council (IASC) that could see South Africa’s largest domestic airline’s operating license suspended or cancelled. 

The airline also clarified that this ruling only affects its international services and has no impact on its domestic flights, which are governed by a different license.

This comes after a ruling from the IASC 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, and has been deemed a foreign entity by the IASC as it is an Irish company.  

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. 

Aviation expert Guy Leitch said it generally understood that substantially South African-owned refers to a maximum of 25% of shares being held by foreign nationals, and FlySafair has fallen short of that. 

However, Leitch said in previous cases where ownership was held through a South African trust, as is the case with ASL Aviation, it has been deemed okay but in this case the IASC has taken exception to it. 

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.

Leitch expects the IASC to issue a final notice to FlySafair to rectify its shareholding rather than shut down the airline before December. 

FlySafair hits back

On 11 November, FlySafair released an updated statement, revealing that it has filed an urgent application for an interdict. 

The company’s initial statement said it remained committed to full compliance with all laws and regulations and to upholding the highest standards of governance.

“Since our most recent structural changes in 2019, FlySafair has fully co-operated with regulatory authorities to ensure that our shareholding and control mechanisms remain transparent.” 

“We have continued to serve South Africans proudly and have maintained control of our day-to-day operations locally. Our team remains firmly based in SA, and our primary focus is on delivering safe, reliable and affordable service to South African customers.”

It also said there is “ambiguity in this regulation”, which had led to “the current scenario of varied interpretations of the regulations”. 

In the updated statement, the airline has clarified that this ruling affects only its international services and has no impact on its domestic flights, which are governed by a different license.

The company has filed an urgent application for an interdict to protect our international customers from any unnecessary disruption. 

“This recent decision pertains solely to FlySafair’s international routes and will not impact any domestic flights, which are governed by a separate license,” the airline said. 

“We are steadfast in our commitment to transparency and operational integrity. We respect the role of the Council and the structures allowing competitor input and are fully prepared to engage in a fair process to find a resolution.” 

“We are engaging with the relevant authorities to avoid any negative impact on customers and have backup plans in place should we need them.”

“Competitors have raised objections to FlySafair’s interdict. While their positions may reflect their business interests, we hope that all parties consider the potential impact on travellers and the broader aviation community.” 

Limiting supply on these routes could drive up fares and disrupt travel plans, particularly as demand rises over the summer holiday period, it said.