A recent ruling by the Air Services Licensing Council (ASLC) concerning the ownership structure of FlySafair has sent shockwaves through the South African aviation industry.
Moreover, the ruling jeopardises the operations of other major airlines, potentially causing significant disruptions for travellers.
AIRLINE OWNERSHIP REQUIREMENTS
The Council has issued a ruling that calls into question the compliance of numerous airlines with the Air Services Licensing Act, specifically regarding 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.’
‘NATURAL PERSON’ SHAREHOLDING
The ASLC’s stance is that this means that airlines must have individual (natural person) shareholders, effectively excluding trusts and companies – a common ownership structure in the industry.
Ignoring the fact that most individuals do not have the capital or resources to own an airline, this interpretation potentially renders the majority of South Africa’s airlines non-compliant, including major players such as Airlink and South African Airways.
FLYSAFAIR OWNERSHIP RULING AFFECTS ALL SOUTH AFRICAN AIRLINES
South Africa’s aviation industry thus faces a potential crisis as this ruling threatens most of the country’s airlines, which are not owned by a ‘natural person’.
“The potential repercussions of this ruling are catastrophic,” says Kirby Gordon, Chief Marketing Officer at FlySafair.
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IMPACTS FOR SOUTH AFRICAN ECONOMY
The effects of this ruling could indeed destabilize South Africa’s aviation and tourism sectors, and therefore the country’s economy.
“It could cripple the aviation and tourism sectors, leading to reduced flight options, job losses, and economic damage.” Gordon said.
FLYSAFAIR SEEKS CLARITY ON OWNERSHIP RULING
As the central figure in this matter regarding airline ownership, South Africa’s low-cost carrier FlySafair is adamant that the ASLC’s interpretation is not only overly restrictive but also contradicts established legal precedent.
“There’s no reason that the rest of the industry, the economy, or the flying public should be harmed through drastic and brash decision-making.” Gordon added.
FlySafair has therefore 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, despite the Council opposing this process.
INDUSTRY-WIDE CRISIS LOOMING
The implications of the ASLC’s ruling regarding ownership extend far beyond FlySafair. There are dire consequences for most of South Africa’s airlines.
If upheld, the decision could disrupt the operations of numerous airlines and air service operators, impacting 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.
FlySafair remains committed to resolving this issue constructively and advocating for a sensible interpretation of the Act that supports the growth and sustainability of the South African aviation industry.
The airline is hopeful that the Minister of Transport will take decisive action to steer the process toward a positive outcome.
