Monday, September 2, 2013

■ SOUTH AFRICA: Comair Ltd moves to block FlySafair's launch on grounds of alien ownership.

Comair LtdSouth Africa's Comair Ltd has sought to reverse the recent issuance of a domestic operator's licence to Safair (FA) for its nascent startup LCC, FlySafair, claiming that it does not satisfy South African laws stipulating that domestic operators must be at least 75% owned by local South Africans. 

FlySafair B737-400 (FlySafair)
According to a report in BusinessDay, Comair has submitted a complaint to the South African Air Services Licensing Council claiming that Safair CEO, Dave Andrew, was not "normally resident" in South Africa and that while he travelled to South Africa regularly, his home was in Ireland. Secondly, Comair claimed that Safair was a "front" formed to enter the South African domestic market noting certain alleged "inconsistencies" in documents, including the FlySafair "management plan", submitted to the licensing council by Safair. Should the council move to dimiss Comair's complaint, the group says it will pursue a legal interdict in which FlySafair's licence issuance of August 23 would be set aside pending a High Court review.

However, Mr Andrew has refuted these claims stating that his company, which  has been operating in South Africa for nearly 50 years albeit in the ACMI & MRO sector, is 75% owned by three South Africans including himself, chairman Hugh Flynn and chief financial officer Elmar Conradie, all of whom have voting rights and receive dividends from the company.

Mr Andrew stated that the other 25% is held by Safair Aviation Ireland Ltd, itself wholly owned by Ireland's ALS Aviation.

Comair in its objections had noted that "some of Safair's submissions had referenced ALS Aviation as a 100% shareholder", a claim Mr Andrew "acknowledged" but which, he stated, had been an oversight in Safair's licensing submission. Mr Andrew also said that Safair was not a subsidiary of the ALS, "but rather an associate company" and that all questions from the licensing council pertaining to its proposed venture had been answered satisfactorily.

FlySafair plans to launch domestic operations in the last quarter of this year with 10x daily flights between Cape Town and Johannesburg (OR Tambo International) using two B737-400s.

Comair has been particularly hawkish about the entry of new competitors into the local South African market, having also lodged objections with the Air Services Licensing Council to fastjet's (FN) initial plan to takeover defunct LCC 1Time on the basis that fastjet would not meet the South African residents ownership requirements to operate domestically.