Wednesday, January 23, 2013

■ SOUTH AFRICA: SAA, Mango, Comair all object to fastjet's 1Time licence transfer designs as Skywise's ASLC application fails.

fastjetIn a rare show of unity, South African carriers Mango (JE), South African Airways (SA) and Comair Group (owners of BA Comair (BA) and Kulula (MN)) have collectively objected to the South African Air Services Licensing Council, a state regulator set to convene next month, over fastjet's (FN) proposed transfer of 1time’s operators licence, who are applying for a Ministerial exemption in order to fast track the process.

AirTeamImages.com /D. Pedley
In its affidavit to the ASLC, state owned Mango objected to the transfer of the licence, claiming that a "high probability (existed) of other domestic airlines, with capital commitments on replacement and new aircraft, defaulting" if fastjet entered the market. This would lead to "an increase in the general credit risk for South African-based and state-owned airlines as a whole", which would make obtaining financing difficult.

SAA's acting CEO Vuyisile Kona, in his objection, asked for an opportunity to supplement the objection pending the outcome of an exemption application lodged by fastjet, who have applied to Transport Minister Ben Martins for an exemption to the Air Services Act, which requires that 75% of the shareholding of the licence holder is held by South African residents. The act gives the minister the power to exempt operators from this requirement.

Source [BusinessDay Live]

Comair CEO Erik Venter said on Tuesday that Comair Ltd had also filed objections but did not elaborate.

In the recent past, South African Airways and its allied state companies have received over USD660million in the last 6 months, leading Erik Venter to allege that 1Time's demise was partly the result of the bailouts.

In a day tantamount to a Bizarro World scenario from Superman, trade union Solidarity came out in strong support of fastjet in its application for 75% local ownership exemption claiming that if the minister did not make the concession, that government's protection of SAA at all costs would result in there being no place for other airlines in the South African aviation industry.
"Strict legislation and the state’s monopolistic behaviour in the airway industry, which includes the state’s continued financial support of South African Airways (SAA), forces free-market competitors out of the market. The demise of SAA’s competitors also serves as an important deterrent to potential investors who would perhaps still have wanted to enter the aviation industry."
Source [Solidarity]

While fastjet's acquisition of 1Time has been mired in legal battles from the beginning, the sale of 1Time's MRO subsidiary Jetworx, to the American Industrial Acquisition Corporation (AIAC), has been approved with 79% of Jetworx’s creditors voted in favour of the transaction. The sale safegaurds 200 jobs for at least six months. 

In other South African airline news, start up "Skywise", borne out of the original owners of 1Time, have had their application for a domestic licence to the Air Services Licensing Council (ASLC) dismissed following their meeting on January 16. The airline's team will now have to wait one month before reapplying.