Transport Minister Barbara Creecy has declined FlySafair’s request for a ministerial exemption from certain provisions of the Air Service Licensing Act, deeming the request premature.

The Minister communicated her decision to FlySafair CEO Elmar Conradie, following the airline’s appeal last Thursday for an exemption while awaiting the outcome of ongoing legal and regulatory processes.

In a statement, Department of Transport spokesperson Collen Msibi said the Minister sought legal advice from the department's legal division, which highlighted that the Domestic Air Services Licensing Council (DASLC) had met with FlySafair and complainant Global Aviation Operations as recently as Tuesday.

“At the meeting, both FlySafair and the complainant were given an opportunity to present oral representations for mitigation and aggravation. The council is still considering these submissions and will make a decision in due course,” Msibi said.

He added that the Minister had instructed the department to seek senior counsel’s advice on the legal implications of FlySafair’s exemption application within the context of the current proceedings.

“It must be noted that it is not a foregone conclusion that the council will cancel FlySafair’s licence. The council is legally required to notify FlySafair of its final decision. Section 25 of the Act also provides that any person aggrieved by the council's decision may appeal to the High Court,” Msibi said, adding that due process must be followed.

FlySafair’s exemption request stems from findings that the airline violated foreign ownership thresholds stipulated for domestic and international air services. The airline could face sanctions, including the potential suspension or cancellation of its licence.

FlySafair chief marketing officer Kirby Gordon said the airline would await further advice. “We acknowledge the statement and thank the Minister for her attention to the matter. We await further guidance from the relevant parties,” he said.

Ownership compliance under scrutiny

The DASLC and the International Air Services Licensing Council (IASLC) are considering FlySafair's alleged contraventions, including the airline exceeding the 25% foreign ownership threshold mandated for South African air services. The councils contend that 75% of FlySafair’s ownership is ultimately held in Belgium via an Irish trust.

However, FlySafair disputes this, arguing that the councils are conflating ownership and control. The airline has filed a court application for a declaratory order and a review of the councils’ findings.

Potential impact

With a 60% market share, FlySafair operates approximately 160 flights daily, carrying up to 30 000 passengers. A suspension or withdrawal of its licence could disrupt domestic and international travel, particularly during key events like the upcoming Coal Conference and Mining Indaba in Cape Town, which are expected to attract over 10 000 international delegates.

Aviation analyst Phuthego Mojapele said FlySafair’s domestic ownership violation is more serious than its international counterpart due to the strict 25% threshold.

“The Qatar and Airlink deal, for example, adhered to the ownership rules, even though Qatar Airways could have acquired up to 40%. FlySafair has had ample time to address this issue since it was flagged in 2022 but has not made the necessary structural changes,” Mojapele said.

He warned that severe sanctions, including grounding the airline, are possible. “There’s a high risk that the airline will be taken to task, and we may see it grounded,” he said.

Broader industry implications

FlySafair argues that the council’s interpretation of the Air Service Licensing Act could render many domestic airlines non-compliant, as the ultimate beneficiaries of any commercial entity are natural persons. However, legal experts contend that the ownership trust structure does not absolve the airline’s shareholders from complying with local laws.

“What matters is who controls and benefits from the company. Companies don’t get rich – the people behind them do,” said an aviation law practitioner.

Origins of the Complaint

The case stems from a complaint lodged by Global Aviation, trading as Lift Airline, which alleged that FlySafair was in breach of ownership rules.

If the councils’ findings are upheld, FlySafair could face severe consequences, jeopardising its operations and causing significant disruption to South Africa’s travel market.

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