FlySafair (FA, Johannesburg O.R. Tambo) faces undisclosed sanctions after South Africa's International Air Services Licensing Council (IASC) found it to be in contravention of foreign ownership restrictions through a 74.86% effective shareholding by Irish firm ASL Aviation Group.

South Africa's Air Services Act requires domestic airlines to have a minimum of 75% local shareholding, while the International Air Services Act requires a "substantial" local shareholding and "active" and "effective control of the international air service" for international operations.

In a leaked letter to the airline on October 31, the IASC proclaimed that Safair Operations Ltd (the airline's legal name) had contravened and/or failed to comply with provisions of the International Air Services Licencing Act (Act 115 of 1990).

"Safair's company structure comprises 49.86% shareholding by the Safair Investment Trust, which is one of three shareholders of Safair, which is eventually 100% owned by ASL Aviation Holdings. This is additional to the 25% shareholding that is also eventually owned by ASL Aviation Holdings, making the total shareholding of Safair by ASL to 74.86%; ASL effectively holds 74.86% in Safair through Safair Investment Holdings," the council declared. The council will provide details of the specific sanctions and their justifications in 20 working days (by November 28, 2024).

In reaction, FlySafair said it has reviewed the IASC's decision regarding its foreign ownership stake, which it said, "remains three tiers removed from the company’s daily operations". "FlySafair takes the IASC’s decision seriously. We await further communications from the council in the next 20 days and remain committed to remain fully compliant with South African regulations and to upholding the highest standards of governance," the airline said in a statement. "On the basis of senior legal support, FlySafair has argued that the company’s structure remains within the bounds of both the letter and spirit of the law, and relevant court rulings pertaining to this regulation. We affirm that our intention is, and has always been, to be compliant with prevailing regulation," it said.

The IASC inquiry into FlySafair began in October 2022 following an ownership amendment application. During the ongoing investigation, formal complaints were filed by competitors, Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) on February 6, 2024, and Global Aviation Operations (GE, Johannesburg O.R. Tambo) on February 16, 2024, both alleging that FlySafair was non-compliant with foreign ownership regulations.

According to an ownership structure provided by FlySafair during the council's investigations, Safair Operations Limited is owned 49.86% by the trustees of the Safair Investment Trust, a beneficiary of SAFOPS Investment Holdings (Pty) Ltd, which is 100% owned by African Aviation Investments DAC in Ireland, which in turn is 100% owned by ASL Aviation Holdings DAC (Ireland). In addition, Safair Operations' 25% shareholder, Safair Holdings, is 100% owned by Safair Aviation Ireland DAC, which is wholly-owned by ASL Aviation Holdings DAC. The remaining 25.14% in Safair Operations is owned by a South African employee ownership vehicle called B4i Safair (Pty) Ltd.

The IASC controls the licensing of international air services under the International Air Services Licencing Act. Another challenge against FlySafair's foreign ownership by Global Aviation is pending before the domestic Air Services Licencing Council (ASLC), which regulates the licensing of domestic air services under the Air Services Licensing Act (Act 60 of 1993).

Airlink declined to comment when contacted by ch-aviation. The airline recently secured a 25% strategic stake from Qatar Airways (QR, Doha Hamad International). Global Aviation equally declined comment at this stage.