State-owned low-cost airline Mango, and Comair, which operates British Airways flights and low-cost operator kulula.com, are chief amongst those that don’t want another low-cost airline operating in South Africa. 

In a case of the pot calling the kettle black, Mango is chief amongst those calling on the Air Services Licensing Council to refuse the granting of the transfer of 1time’s licence to fastjet because of financial issues. 

The Air Services Licensing Council, a state regulator in the industry, will meet next month to hear arguments for and against the transfer of 1time’s licence to fastjet, which is building a low-cost pan-African carrier and hopes to take to the skies as soon as possible by taking over grounded 1time planes. 

Mango said in an affidavit, opposing the licence transfer, that there would be a “high probability of other domestic airlines, with capital commitments on replacement and new aircraft, defaulting” if fastjet entered the market. 

Mango CE Nico Bezuidenhout said in a statement: 

[The] real growth for South African airlines, in particular low-cost carriers, lies in seizing the Continental Opportunity (sic). This could be the silver lining in 2013, a year anticipated to show better growth overall. African growth, at a forecast 5%, is well above the global average, and the progressive realisation of the Yamoussoukro declaration [for open skies] in the near future sets the stage for accelerated growth outside our borders. 

Mango’s affidavit continued, ironically, that “an increase in the general credit risk for South African-based and state-owned airlines as a whole”, would thus come about, and obtaining finance would become difficult.

Reported Business Day: 

SAA acting CEO Vuyisile Kona also lodged an objection with the council to the transfer of 1time’s licence. He did not provide detail, but asked for an opportunity to supplement the objection pending the outcome of an exemption application lodged by fastjet. 

To win regulatory approval for its acquisition of 1time, fastjet has applied to Transport Minister Ben Martins for an exemption to the Air Services Act, which requires that 75% of the shareholding of the licence holder is held by South African residents. The act gives the minister the power to exempt operators from this requirement. 

1time’s provisional liquidator, Aviwe Ndyamara, confirmed other airlines had objected to the application, but declined to comment. “I am not at liberty to discuss these matters under advice from our attorneys,” he said. 

Despite the fears that Mango raised in its affidavit to the council, the airline yesterday issued a statement congratulating itself for filling the gap left by 1time’s demise, which gave it “the best year-end holiday season since inception”. 

Mango also provided details of its intentions to expand routes this year — mirroring fastjet’s plans.

[Source: BusinessDay]