South Africa’s largest airline under threat
FlySafair is at risk of being grounded after the Air Services Licensing Council (ASLC) affirmed that its shareholding does not comply with local laws.
South Africa’s Air Services Licensing Act stipulates that domestic airlines must have at least 75% local ownership.
FlySafair is 74.86% owned by ASL Aviation Group, an Irish aviation services holding company focused on cargo and passenger airline operations.
This shareholding, as it stands, contravenes the South African and international Air Services Licensing Act.
Airlink and Global Aviation Operations, which operates Lift, lodged formal complaints regarding Flysafair’s shareholding, and an inquiry was launched in October 2022.
Towards the end of last year, the International Air Services Council (IASC) ruled that FlySafair’s shareholding structure was not compliant with South African law.
This week, South Africa’s Air Services Licensing Council reiterated that FlySafair is non-compliant with domestic licensing rules.
FlySafair issued a press statement, saying the council’s ruling calls into question the compliance of numerous airlines related to ownership requirements.
“The crux of the matter lies in the interpretation of the Act’s provision mandating that 75% of an airline’s voting rights must be held by ‘Residents of the Republic’,” it said.
The ASLC’s stance is that airlines must have individual (natural person) shareholders, effectively excluding trusts and companies.
It said this interpretation ignores the fact that most individuals do not have the capital or resources to own an airline.
“This interpretation potentially renders the majority of South African airlines non-compliant, including major players like Airlink and SAA,” it said.
FlySafair said it had taken proactive steps to address the ambiguity in the Act by seeking a declaratory order from the courts.
“This legal action aims to provide clarity and guidance for the entire industry, albeit that the ASLC has opposed this process,” it said.
FlySafair said it remained committed to resolving this issue constructively and advocating for a sensible interpretation of the Act.
This suitable interpretation should “support the growth and sustainability of the South African aviation industry”.
FlySafair is hopeful that the Minister of Transport will take decisive action to steer the process toward a positive outcome.
“The implications of the ASLC’s decision extend far beyond FlySafair. If upheld, it could disrupt the operations of numerous airlines and air service operators,” it said.
If airlines are grounded, it will impact flight schedules, ticket prices, and the overall travel experience for passengers.
“The uncertainty surrounding the ruling has also raised concerns about potential job losses and the long-term economic impact on the aviation sector,” it said.
“It could cripple the aviation and tourism sectors, leading to reduced flight options, job losses, and economic damage.”
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