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FlySafair is facing legal challenges from fellow airlines like Lift and Airlink over its foreign ownership, and risk being issued with a final warning to rectify its shareholding.

Speaking to 702, SA Flyer Magazine editor Guy Leitch says he doesn’t believe FlySafair will be forced to shut down anytime soon, but if FlySafair were forced to cease operations, it would most certainly result in much higher flight fees this holiday season, as its competitors would face far more demand.

The issues stem from South Africa’s ownership regulations for domestic airlines, which limit foreign shareholdings in a registered airline to 25%. With Ireland-based ASL Aviation Holdings holding a majority share in FlySafair, the local carriers are crying foul.

MyBroadband reports that this has led to submissions from competitors such as Airlink and Global Airways, who launched Lift, a competitor to FlySafair in late 2020 after the Air Service Licencing Council determined that FlySafair’s ownership structure violated local rules.

However, Leitch believes that such severe controls are unnecessary.

“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.”

The outcome of the latest submissions will be revealed in 20 working days, but Leitch says he doesn’t see the Christmas holiday’s travel being impacted.

“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 klapped back at Airlink and Lift over the submissions, saying that the carriers should rather focus on their own service than try to disrupt FlySafair. Gordon said 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.

Noting that the complaints have come despite nothing having changed at FlySafair, since its last injection of foreign investment 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.

One can not help but feel the submissions from the other airlines are a bit opportunistic seeing as FlySafair has been eating everyone else’s lunch the last few years. 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.

This sounds like sour grapes from the other players, who instead of improving their service would rather scupper the competition. Maybe they should sweep in front of your hangers first.

[source:mybroadband]