South Africa’s largest airline fights back

FlySafair, South Africa’s biggest domestic airline, is facing several headwinds that threaten to ground the carrier or significantly impact its ability to operate. 

Most recently, the Air Services Licensing Council (ASLC) confirmed that the company does not comply with local aviation legislation. 

The ASLC confirmation followed a ruling from its fellow regulatory body, the International Air Services Council (IASC), that said FlySafair’s shareholding structure is not compliant with local laws. 

As it stands, an airline operating in the country’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. 

Kirby Gordon, the chief marketing officer at FlySafair, recently disputed the assertion that the company’s ownership structure is not compliant with South African law. 

“It is more of a matter of paperwork really than anything to with nuts and bolts,” Kirby told Newzroom Afrika. 

“On that basis, we really hope that sanity will prevail across the board and we can prevent any undue harm to the flying public and our employees.” 

Gordon explained that the ASLC did not find the airline has too much foreign control but rather took exception to its being partly owned by trusts and companies instead of individuals. 

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.

“The ramifications of that are huge because most airlines in South Africa are owned by a combination of trusts and companies. This will impact possibly 87% of domestic seating capacity.” 

FlySafair has approached the courts for clarity to address ambiguity in the South African and International Air Services Licensing Act.

The airline said it has the support of the Transport Department in this endeavour. 

The Department has said Minister Barbara Creecy will seek legal advice after meeting with the airline and the councils. 

It explained that the councils would consider all submissions, and the ongoing developments do not mean that FlySafair’s licence will be automatically cancelled. 

FlySafair is also currently being investigated for overbooking its flights by the National Consumer Commission. 

The airline has apologised to customers but also defended the practice, saying that it was a globally accepted industry standard used to manage no-shows and maintain affordable ticket prices.

The Consumer Protection Act also does not consider this practice a problem because many people view it as a benefit to be bumped from their flight. 

The Act does, however, provide that the airline must get the passenger to their destination under the conditions of carriage, which is the contract that the airline enters into with the passenger.

Sometimes, this may mean that the passenger arrives late or even that they are put on a different airline to complete the contract. 

Aviation expert Guy Leitch explained that overbooking is a worldwide phenomenon and is not unique to FlySafair. 

Leitch said it is inevitable that a few passengers on every flight will miss their booking due to reasons like car trouble, personal issues, or simply not hearing the boarding announcement.

For this reason, it’s both practical and financially sensible for airlines to overbook flights during peak times by selling more tickets than there are seats available.

If, on the odd occasion, everyone arrives for the flight, FlySafair offers a cash incentive to passengers who aren’t in a rush and are willing to take the next flight.

This practice not only helps reduce flight costs but also leaves many flexible passengers happy with the compensation they receive, explained Leitch.

However, missing a flight you’ve booked can be a major inconvenience, and not everyone is willing to give up their seat for an incentive.

Thankfully, there are steps passengers can take to avoid this situation, he noted.

One option is to book a specific seat for a small extra fee, which guarantees your spot and prevents you from being bumped from the flight.

Since airlines typically discover they are overbooked near the end of the boarding process, passengers who arrive late are most at risk of losing their seats.