Expert warns SAA could lose some of its lucrative routes if its operating license is suspended

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An aviation expert has warned that South African Airlines (SAA) could lose some of its lucrative routes if its operating license is suspended. The airline this week was given 90 days by the South African Air Services Licensing Council to meet its compliance obligations and give more details regarding its deal and acquisition with Takatso Consortium.

Aviation expert Phuthego Mojapele says, “The license would be suspended. But suspension does not mean that you would not be able to fly again or you won’t be able to get a license. It simply means that when you get suspended, you need to provide the reasons – and stipulated on the letter that you were issued with – that you are able to continue flying and be able to service the license, the license that the SAA operates on, or any other airline in the borders of South Africa, not the government. It’s not your own routes, nobody owns the routes, they belong to the state.”

Mojapele says it is the council’s prerogative to give routes to a South African registered company or airline that wants to operate on them because the routes need to be maintained.

“If they are not doing that, it is important that a regulator needs to come and ask them questions as to why are they not doing that. As to Takatso deal is concerned, it is important that the DPE (Department of Public Enterprises), which is the owner of SAA in the form of a government needs to clarify the transaction between South African Airways and the new equity partner that is coming. At this stage, we don’t have the details. And we’re not even sure whether they will meet the 90 days as required by the licensing console.”

Mojapele says Takatso probably did not foresee some of the challenges it would face with such a transaction when it acquired SAA.

“Remember, you’re not transacting with a private entity here. You are transacting with a government entity. Now, doing that there are a whole lot of regulatory processes that need to be followed. One would assume that some of those regulatory processes are other things that may delay the process. But the silence in DPE about the processes is really concerning; probably they were trying to secure that R3 billion that they spoke about, probably offshore. I can only imagine that they would get those resources offshore. Surely, we should be able to get clarification from the DPE.”

SAA will have to submit proof that its business model with Takatso Consortium will be able to secure the licensing conditions.

SAA currently operates lucrative routes including Heathrow in London, major African cities and sort after destination routes like Cape Town and Port Elizabeth.

In the video below, Chartered Accountant and Commentator Khaya Sithole explains the SAA, Takatso Consortium deal: