Local white knight possibly to the rescue as airline fights ruling.
Budget airline FlySafair is fighting to hold on to its operating licence and will next week challenge an Air Licensing Council ruling last year that it had contravened foreign ownership laws.
The council governing domestic flights found that Irish-based ASL Aviation Holdings effectively owns 74.86% of FlySafair, which is in violation of South African laws that limit foreign ownership to 25%.
In November, the International Air Services Licensing Council, which regulates services outside SA’s borders, concluded the same.
The Air Licensing Council will meet next week to hear arguments in mitigation or aggravation of the established verdict.
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A familiar face coming to the rescue?
But a source within the aviation sector suggests a local suitor may provide a free pass to the carrier.
The former corporate lead in the Takatso Consortium’s failed bid to buy SAA, Harith General Partners, have purportedly made a third pass at airline ownership as suitor.
This time it is keen to acquire equity in FlySafair, which will help the airline to overcome the local ownership hurdle the company is facing.
And while a Harith General Partners employee did respond to The Citizen, they could not confirm nor deny any overtures made as their principles were still on holiday.
Harith was previously part of a consortium that unsuccessfully bid to acquire Comair in 2020 prior to the now-defunct airline entering business rescue.
The company has a major interest in Lanseria Airport and FlySafair is presently the only commercial airline that operates from the North Rand aerodrome.
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FlySafair respond
FlySafair did not respond to a direct question about whether Harith had approached the airline at all. Instead, spokesperson Kirby Gordon segued back to the licensing council ruling.
“FlySafair has always upheld that it complies with the voting rights requirements of the applicable legislation and remains steadfast in its commitment to meeting all regulatory obligations.
“In response to the council’s interpretation, the airline is carefully assessing its options to address the matter.
“These options include implementing adjustments aligned with the council’s interpretation or pursuing a challenge through appropriate legal channels,” Gordon said.
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He also reiterated FlySafair’s view that the legislation on foreign ownership is unclear.
“Given the ambiguity in the relevant legislation, we are awaiting further insight into the council’s reasoning to fully understand their perspective on the alleged infringement before taking the necessary steps.”
A well-placed industry source questioned how FlySafair was the only airline that found the legislation unclear while other carriers complied.
The source also told The Citizen that should the carrier elect to make the adjustments noted and aligned with the law as it stands, it could mean a deal like the mooted Harith play is on the cards.
Yet, the source said, there is precious little time to effect a commercial arrangement with Harith, other than announcing the intent to do so at next week’s meeting.
“It will be a winning hand, though,” the source said.
Regulations counterproductive?
Aviation analyst and editor of SA Flyer magazine Guy Leitch said earlier restrictions on foreign ownership of local airlines were antiquated and counterproductive in terms of attracting direct foreign investment in a capital-intensive industry.
He said the laws had substantial implications for the sector and that Qatar Airways’ recent purchase of a 25% stake in Airlink could have been higher, had the law not prevented greater investment.
Other markets usually cap foreign stakes at around 50% while deregulated markets could allow full investment.
The worst outcome for FlySafair would be a suspension of its licence until its shareholding is corrected. However, right now, Gordon said, it was business as usual.
“The airline prioritises transparency and accountability and will continue to keep stakeholders and the public informed as the situation develops.”
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