The high court in Pretoria has grounded new start-up low cost airline FlySafair before it has even taken off, following an application by two rival airlines.
Judge Neil Tuchten granted an interim order, restraining Safair from operating a domestic passenger air service pending the finalisation of a review application to set aside the licence issued to it. The court order followed an application by rival airlines Comair, which runs low-cost carrier Kulula, and recently licenced Skywise Airline, which is still waiting for an operator's certificate before it can take to the skies.
Tuchten ordered Comair to take all reasonable steps to ensure that all persons who had bought Safair tickets already would be accommodated on the dates designated in their tickets in aircraft available by Comair at its own cost.
Comair will not be entitled to charge any additional costs for this service. Comair was also ordered to bring the contents of the court order to the public's notice "by all reasonable means", including advertising in the media, at its own cost.
Comair and Skywise objected to Safair's application to amend its licence so that it could operate a low-cost airline in direct competition with Skywise. The airlines contended Safair did not comply with legislation aimed at ensuring air services were controlled by South African citizens, as 75% of the voting rights were not held by persons ordinarily resident in South Africa.
They alleged active control of Safair vested in its holding companies in Ireland and ultimately in Belgium and that FlySafair had devised a scheme to "simulate" compliance with the Air Services Licencing Act. They further contended Hugh Flynn, one of the three persons said by Safair to be its shareholders, did not ordinarily reside in South Africa as claimed on his behalf before the Air Service Licensing Council.
Tuchten said the evidence before court disclosed a strong probability that the information put before the council by Safair deliberately concealed the true position. "The probability is that Safair designed and implemented a scheme which created the illusion that Safair in fact had brought itself within section 16(4) of the Act while in truth it had not. "Where, as in this case, a strong likelihood has been established that, if the administrator had appreciated the true facts, the decision would not have been made in favour of the respondent, a court should … lean towards forthwith putting an end to such illegal conduct," he said.
He said there was no doubt that Safair would suffer considerable financial prejudice, running into millions of rand and damage to its reputation, if an interim interdict was granted, but its cause was Safair's own scheme which was probably illegal.
" … Safair is admittedly a subsidiary of its Irish holding company … The company in its turn a subsidiary of its Belgian holding company.
"The evidence shows that both holding companies control their subsidiaries.
" … In my view there is a strong probability that Safair is both commercially and legally obliged to defer to and implement any decisions made by its holding companies in relation to Safair's proposed operation … and that Safair will thus not be in effective control of the proposed new enterprise," said Tuchten. – Sapa