SA’s International Air Services Council (IASC) has ruled that the shareholding structure of low-cost airline Flysafair is not compliant with the law — a decision that could end in a sanction that affects the airline’s ability to operate.
The inquiry by the IASC into Flysafair’s shareholding structure dates to October 2022 and includes formal complaints by Airlink and Global Aviation, which operates LIFT, received by the IASC in February.
SA law requires that voting rights in a local airline must be substantially held by residents of the republic, yet the annual financial statements of the Ireland-based company, ASL Aviation Holdings, indicate that Flysafair is controlled by a subsidiary of ASL and that ASL owns 74.86% of the airline.
Throughout the inquiry, Flysafair’s stance has been that “on the basis of senior legal support”, it believes its company’s structure remains within the bounds of both the letter and spirit of the law, as substantiated by relevant court rulings in other cases.
Contravened
However, the IASC has now ruled that it is satisfied that Flysafair has contravened and/or failed to comply with provisions of the law in that the company structure comprises 49.86% shareholding by the Safair Investment Trust, which is eventually 100% owned by ASL.
This is in addition to the 25% shareholding that is directly owned by ASL. SA aviation law limits foreign ownership in domestic airlines to 25%, amatter still before the IASC’s sister body, the Domestic Air Services Council.
The IASC also ruled that Flysafair failed to apply for an amendment of its air service licence when its ownership structure changed in March 2019. The IASC said it would announce a sanction within the next few weeks.
It has been reported that a sanction could include cancelling or suspending Safair’s aviation licence until its shareholding structure is fixed, or imposing fines or penalties.
In reaction to the IASC ruling, Flysafair issued a statement saying that it took note of it and remained committed to full compliance with all laws and regulations and to upholding the highest standards of governance.
“We understand the importance of transparency, foreign involvement limitations and the role of responsible corporate governance in building trust with our valued customers, partners, regulators and the public,” Flysafair said.
“Since our most recent structural changes in 2019, Flysafair has fully co-operated with regulatory authorities to ensure that our shareholding and control mechanisms remain transparent. We have continued to serve South Africans proudly and have maintained control of our day-to-day operations locally. Our team remains firmly based in SA, and our primary focus is on delivering safe, reliable and affordable service to South African customers.”
It also said it acknowledged “the ambiguity in this regulation”, which had led to “the current scenario of varied interpretations of the regulations”. The airline said it remained prepared to work collaboratively to align with definitive legal standards.
“We are confident that through open dialogue and continued co-operation we will resolve any outstanding issues swiftly. FlySafair values the trust that our customers and stakeholders have placed in us and we remain steadfast in our commitment to safety, transparency and accountability.
“We wish to offer our customers assurance that this decision has no immediate impact on our operations as we pursue business as usual,” Flysafair said.
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