FlySafair Faces Ownership Challenges Amid South African Flight Market Dominance

FlySafair, South Africa’s leading domestic airline, is facing legal challenges from competitors Airlink and Lift regarding its foreign ownership structure. While these challenges threaten FlySafair’s future, industry expert Guy Leitch, editor at SA Flyer Magazine, believes the airline won’t be shut down anytime soon.

Foreign Ownership Regulations Spark Debate

The controversy stems from South Africa’s ownership regulations for domestic airlines, which limit foreign shareholdings to 25%. However, Ireland-based ASL Aviation Holdings held a majority stake in FlySafair, prompting complaints from competitors.

Airlink, along with Global Airways, launched Lift, a rival to FlySafair, in late 2020. These competitors argue that FlySafair’s ownership structure violates local regulations. Guy Leitch believes the stringent regulations hinder foreign investment and airline recapitalization.

“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.”

FlySafair Potential Closure Unlikely, Expert Says

Although FlySafair’s license is under threat, Leitch doesn’t anticipate closure. “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 predicted.

Adding, “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 Responds to Competitors’ Claims

FlySafair’s chief marketing officer, Kirby Gordon, criticized Airlink and Lift’s actions, calling their complaints misguided.

“They should focus on improving themselves rather than trying to disrupt FlySafair’s operations,” Gordon stated. “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.

He further emphasized that FlySafair hasn’t received additional foreign investment since its inception in 2013. Gordon highlighted similar challenges from Comair and Skywise during FlySafair’s initial application for its operating license.

Gordon questioned Lift and Airlink’s motives, suggesting the complaint stems from FlySafair’s recent application for additional rights to operate flights between Johannesburg and Harare. He believes FlySafair’s market dominance is driving these actions.

Since relaunching in 2014, FlySafair has become the dominant player in the South African domestic flight market, controlling around 60% market share. Competitors argue that FlySafair’s alleged illegal foreign ownership provides an unfair market advantage.

What Does the Future Hold for FlySafair?

The outcome of this legal battle will undoubtedly impact FlySafair’s future and shape the landscape of South Africa’s aviation industry. Stay tuned for updates as this story unfolds.