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Comair's fastjet concerns

On the 25th April 2013 Comair released the following letter, outlining their concerns about fastjet:

"COMAIR’S CONCERNS REGARDING FASTJET
25 APRIL 2013

BACKGROUND

  • In February 2013, 1Time Airline (in provisional liquidation) submitted an application to the Minister of Transport in terms of section 16(5) of the Air Services Licensing Act, whereby it requests a relaxation of the 25% foreign shareholding limit on a South African airline. This relaxation was requested in order for Fastjet, a subsidiary of Lonrho Plc (a UK based investment company), to acquire 100% shareholding of 1Time and, in time, subject to unspecified market conditions, sell a 25.1% shareholding to a black empowerment partner. 

  • Fastjet has withdrawn from this plan, and has announced a scheme whereby it will take a 25% shareholding in a company called Blockbuster, associated with a number of high profile South Africans including, Mr Edward Zuma and Mr Yusuf Kajee, and outsource its airline operations to Federal Air, using the existing license and infrastructure of Federal Air.

COMAIR’S CONCERNS REGARDING FASTJET’S LATEST OWNERSHIP SCHEME
Comair welcomes private competition in the South Africa aviation market, but still prioritises the achievement of a level playing field and equal treatment as the most fundamental requirement to the long term sustainability of the industry.  The failure of so many domestic airlines, to the detriment of the public, the industry suppliers, and the image of the industry, is as direct result of all airlines not facing the same competitive and commercial risks.

Fastjet’s latest approach to operate as a South African airline, again potentially breaches the principle of a level playing field, in its ability to use South African sovereignty to obtain route rights to other African countries that it would not be entitled to as a foreign airline, and that South African airlines cannot obtain on a reciprocal basis.   The use of South Africa as a flag of convenience by foreign airlines will tarnish South Africa’s image when negotiating for route rights with other countries.  It also sets a dangerous precedent for more substantial, global airlines to set themselves up in South Africa, without our own airlines having reciprocal legal rights.

Comair has not been able to determine the details of the most recent structure proposed by Fastjet, whereby 75% of shares will be held by a local company called Blockbuster and the airline operations will be performed by Federal Air on its Airline Operators Certificate.  However, at first glance the announced structure does raise many potential questions of legality and intent, and whether this is a virtual airline with no assets or operations of its own.

Ends

For more information, contact:
Atmosphere Communications
Marise Lerm
Tel: 021 469 1568
Cell: 082 826 0457
Email: marise@atmosphere.co.za

Comair Limited
Susan van der Ryst
Corporate Communications Manager
Tel:  011 921 0377
Cell:  083 283 7832
Email: susan.vanderryst@comair.co.za

"

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