FlySafair has appealed for exemption to Minister for Transport Barbara Creecy as it fights guilty verdicts by the Air Services Domestic Council and International Air Services Licensing Council of contravening the foreign ownership threshold in the domestic and international airspaces. Picture: supplied
FlySAFAIR has appealed for exemption to Minister for Transport Barbara Creecy as it is hemmed in by guilty verdicts of contravening the foreign ownership threshold in the domestic and international airspaces, leading to the possibility of it being taken off South African airspace routes.
This is as FlySafair awaits sanction from both the Domestic Air Services Licensing Council (DASLC) and the International Air Services Licensing Council (IASLC), whose considerations may include processes to recoup the losses by the country from the airline's prohibited practice over the years.
Aviation analyst Phuthego Mojapele said the finding by the domestic council was more serious than that of the international counterpart because there was a strict 25% threshold the airline misrepresented, as the dispute revolves around the requirement that 75% of the voting rights of air services licensees (airlines) must be South African residents, and that the licensee must be in effective control of the airline.
Analysts and legal experts tore into its argument that the interpretation of the Air Services Licensing Act renders almost all domestic airlines non-compliant and puts their operations at risk because the ultimate beneficiary of any commercial entity is natural persons.
The airline describes the council’s interpretation of the act as “highly unique and irregular in the context of global aviation, with almost no examples of similar legislation existing in other countries around the world.”
FlySafair Chief Marketing Officer Kirby Gordon confirmed the airline had appealed for Transport Minister Barbara Creecy's intervention by giving them exemption from the relevant legal provisions until its court application for a declaratory order and its court review of the council’s finding of non-compliance have been finalised.
Creecy’s spokesperson, Collen Msibi, confirmed receipt of the letter on Tuesday.
“The request is currently being considered by the departmental legal services, taking into account the regulatory environment,” he stated.
Mojapele said the sanction on the airline would likely be severe as the matter of its domestic ownership had been discussed since 2022 without it making the necessary changes to its structure.
"The Qatar and Airlink deal, for example, was tailored to meet the 25% requirement. Qatar could have taken even up to 40%, but they adhered to the rules. The benefit and dividends the airline has derived from 2022 when the matter was flagged are quite huge, taking into account that it has about 60% of the market share," Mojapele said.
He said appealing to the Minister only applied if the conditions the airline had been established in had changed or if it were aggrieved that rules were not applied consistently in its case.
"There is a high risk or possibility of the airline being taken to task and perhaps being grounded; we might see that," Mojapele said.
An aviation law practitioner said the endowment of ownership to a trust did not absolve its owners or shareholders from compliance with local laws.
"What is most important is who is behind the company in question because companies by their nature do not derive financial benefit from their operations; the company does not get rich, but the people behind it do," they said.
The matter stems from Global Aviation, trading as Lift Airline, laying a complaint with both councils against FlySafair, alleging non-compliance with the relevant provisions.
The councils contend that 75% of FlySafair’s ownership is held in Ireland and ultimately in Belgium, but the airline says the council is conflating ownership and control.
This could lead to the suspension or withdrawal of the airline’s licence, which will effectively see it grounded.
With a market share of about 60% and up to 160 flights carrying 30 000 passengers per day, this could disrupt travel plans and be a disaster not only for FlySafair but for thousands of passengers who will be stranded since the capacity to accommodate them with other airlines is limited.
FlySafair also warned that severe sanctions could disrupt the market and jeopardise the travel plans of thousands of passengers, including the upcoming Coal Conference and Mining Indaba in Cape Town, which is expecting more than 10 000 international visitors.
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