Despite having its objections to the licensing of FlySafair dismissed by the Air Services Licensing Council (ASLC), Comair is still none too happy about FlySafair’s rights to fly in SA airspace, according to CEO Erik Venter. In an ASLC hearing in February, Comair raised concerns regarding the opaque nature of the new shareholding structure of Safair. It proposed that “further investigation was required into the structure to identify its ultimate beneficiaries and where ultimate control lay”, Venter said. This followed a case in the High Court last year when Comair/Skywise Airline disputed FlySafair’s claim that 75% of its shareholding was controlled by three directors. After a convoluted argument about who-ownedwhat, involving a complex sequence of company sales and acquisitions in SA and Ireland (See FTW September 6, 2013), the court found in favour of Comair/Skywise. FlySafair, in its then shareholding format, was banned from the SA skies. Safair was then looking for another locally owned 25% shareholding to add to the 50% controlled by SA residents, CEO Dave Andrew and chief financial officer Elmar Conradie, and which added up to that magic 75%. And it has come up with an interesting – but for Comair arguable – new shareholding set-up. According to Andrew, FlySafair has “got rid of the shareholding that caused the problems”. He said that the airline had concluded the largest employee share ownership scheme in the SA aviation industry, giving its local employees a 25.14% stake in the company. And, after the ASLC rejected Comair’s objections to the new structure, it granted a Type S1 licence to Safair to operate domestic scheduled passenger services. “We have requested reasons from the ASLC for both the dismissing of our objections as well as the council’s decision for granting the licence,” Venter told FTW. “Once the reasons have been disclosed, we will consult with our legal team whether sufficient grounds exist to take the decision of the ASLC on review in the High Court.” Backing Comair’s case is the fact that SA and almost all other countries around the globe have placed a restriction on the foreign ownership in locally licensed airlines. “So,” Venter said, “ just as foreign companies cannot freely mine our natural mineral resources or freely fish in our marine territory, foreign airlines also cannot freely operate in our territory. Certainly not unless 75% of the shareholding in such entity is held by persons who are ordinarily residents in SA. And, according to Venter, these persons must have active and effective control of the airline. “This means that such persons must carry the risks and rewards associated with the airline.” He added that there was a real risk, which he said was “present in the precedent set by the granting of a scheduled air service licence to Safair”. This is that it will allow large foreign aviation companies to enter the SA domestic airline market by setting up “front companies”. But where, in reality, “the majority of financial and operational control of the airline does not reside with SA residents”. But Lorna Terblanche, vice-president passenger services for FlySafair, was confident that the employee shareholding would be able to withstand any investigation made of it. “After last year’s court interdict against us, we spent a whole three months putting together this share benefit scheme,” she told FTW. “We then re-applied for our licence to the ASLC and their legal team examined everything.” And finally, this licence was granted on March 31. “I don’t see how they (Comair) can say it’s fronting. We are confident that everything is above board,” Terblanche added. CAPTION Ready for takeoff… FlySafair is confident it will hold tight under any scrutiny. INSERT & CAPTION Just as foreign companies cannot freely mine our natural mineral resources, foreign airlines also cannot freely operate in our territory. – Erik Venter
