Business group Sakeliga has taken the Air Service Licensing Council (ASLC) to court, asking the court to see the BEE requirements put forward by the council in the adjudication of licence applications, saying this would drive investment in the sector.
Sakeliga, which represents more than 12,000 businesses and business people, took umbrage at the council’s requirements last year that demanded prospective licence holders to submit a transformation plan and commit to improving their broad-based BEE scores, seemingly as part of their licensing applications.
The lobby group in its affidavit says the broad-based BEE requirements put forward by the council were unlawful as such requirements do not find expression in the act that governs the work of the council.
“Applicants for licences commit substantial resources which are required for the purposes of acquiring capital and operational capacity for the purposes of making application for licences which applications are designed to comply with the legislation and regulations currently applicable. In circumstances where there are moving goalposts, substantial unavoidable expenditure may prove fruitless,” Sakeliga said.
“A lack of policy and regulatory certainty will result in reluctance from both domestic and international players investing resources in the industry. In an environment of fine margins, investors would be inclined to ‘make safer bets’. Employment opportunities in the domestic market may be needlessly sacrificed.
“A climate of prejudicial uncertainty has seemingly become the norm in the industry, with applicants complaining of public hearings becoming the forum through which the first respondents set arbitrary targets for different applicants regarding the racial makeup of the ownership structures.”
The council is a statutory body responsible for awarding or revoking traffic rights to airlines based in SA subject to operational, safety and liability requirements.
Sakeliga, founded in 2011 has not been shy to push back against BEE legislation, scoring a victory in 2022 when it successfully challenged the constitutionality of the 2017 public procurement regulations, which disqualified companies from tendering based on the race of their owners.
The organisation’s CEO, Piet le Roux, at the time described the Constitutional Court’s judgment as “the first significant roll back of a BEE-type law in SA”.
In its confrontation with the ASLC, Sakeliga said it was also challenging the alleged secrecy by which the council was conducting its business.
“As part of our investigation, Sakeliga discovered an additional concerning practice by the ASLC. Unlawfully so, the ASLC expressly prohibits applicants from recording their licensing application hearings and even bringing any electronic equipment into such hearings. This, despite the fact that the act stipulates that the hearings should be public,” Sakeliga said in a statement.
“During these hearings, applicants have found themselves confronted with arbitrary and verbal demands regarding BEE and transformation, which conveniently appeared nowhere on paper. If the panel wasn’t satisfied with undertakings or explanations, applicants would be instructed to reapply after they had complied with outstanding BEE requirements.”
The ASLC could not be reached for comment.
Sakeliga is also looking to rein in the powers of the Property Practitioners Regulatory Authority, which in March announced that BEE compliance would henceforth be a prerequisite for being an estate agent, managing agent and property developer, among other disciplines in the property sector.
Le Roux has warned the organisation’s members to prepare for a “third wave” of BEE, in which regulators have adopted a two-phased approach to implementing BEE.
“In phase one, the foundation is laid. First, where feasible, the state redefines an industry in a way that vastly extends the reach of its regulator. The regulator then gradually implements compulsory BEE reporting, though usually without attaching significant penalties to noncompliance, as if the reporting is only for statistical purposes,” he said.
“In phase two, with the Trojan horse in place, the regulator starts enforcing compliance on an industry now used to BEE reporting. The pretence is dropped and gradually all businesses — even those who have no contracts with the state — are required to comply with ever-increasing B-BBEE demands or face prohibition from doing business at all.”
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