FlySafair in danger of losing licence to fly

While local low-cost airline FlySafair faces legal challenges from players like Lift and Airlink over its foreign ownership, the editor at SA Flyer Magazine, Guy Leitch, doesn’t believe it will be forced to shut down anytime soon.

Speaking to 702, he added that the domestic carrier could be issued with a final warning to rectify its shareholding.

If FlySafair were instructed to shut down, it would likely result in significantly higher flight prices this festive season as its competitors will face much higher demand.

The issues stem from South Africa’s ownership regulations for domestic airlines, which limit foreign shareholdings in a registered airline to 25%.

However, Ireland-based ASL Aviation Holdings had a majority share in the South African airline.

This led to submissions from competitors like Airlink and Global Airways, which launched Lift, a competitor to FlySafair, in late 2020.

It’s important to note that while the International Air Services Council (IASC) has ruled on FlySafair’s ownership, the Air Services Licencing Council (ASLC) hasn’t yet.

However, the IASC must still determine what sanction to place on the airline, and it can only take action in respect of FlySafair’s licences to operate internationally.

According to Leitch, there is an argument that such strict ownership regulations aren’t required in South Africa.

“The real problem here is that it limits foreign investment, and the recapitalisation of airlines. SAA would, I think probably also love to see a foreign owner with perhaps a 49% or 50% ownership,” he told 702.

“There’s a good argument to say we don’t need a law like that, or we don’t need one as restrictive as 25%. Most countries have a 50% limit on foreign ownership.”

Asked whether he believes FlySafair will be forced to shut down, Leitch said the outcome of the latest submissions will be revealed after 20 working days, but he doesn’t anticipate a closure.

“I don’t think they’ll shut it down just before Christmas. I suspect it will be issued with absolutely final notice to rectify the shareholding,” he said.

“That’s my hope of what will happen, but we’ve got 20 working days until we hear the outcome. Obviously, we’d hate to lose FlySafair, which is now the biggest carrier in the South African market, right before Christmas.”

FlySafair chief marketing officer Kirby Gordon slammed competitors Airlink and Lift after they submitted complaints over its foreign ownership.

He said the airlines should focus on improving themselves rather than trying to disrupt FlySafair’s operations.

Gordon explained that any airline in the country can have a 25% foreign investor, as with FlySafair, adding that the company’s foreign investor doesn’t give it any competitive advantage.

He also said FlySafair hasn’t received any additional foreign investment since it launched in 2013.

Gordon highlighted similar challenges from Comair and Skywise when FlySafair applied for its operating licence. The competitors argued that ASL Aviation Holdings didn’t comply with local ownership laws.

This resulted in FlySafair being grounded and restructured to comply with the regulations, after which it relaunched in 2014.

Gordon questioned the motives behind Lift and Airlink laying fresh complaints despite nothing changing at FlySafair from an ownership perspective.

He said the complaint followed FlySafair’s application for additional rights to offer more frequent flights between Johannesburg and Zimbabwe’s capital, Harare.

It isn’t surprising that competitors want to disrupt FlySafair’s operations as a result of its dominance in the domestic flight market. Since its relaunch in 2014, it has grown to be the biggest player in the market.

The domestic airline has grown to hold around 60% of the domestic flight market in the country. Its competitors argue this is due to an unfair market advantage due to illegal foreign ownership.