CemAir CEO Miles van der Molen shares his thoughts on Ivo Vegter’s article on Safair, published on BizNews last week, taking Vegter and BizNews to task.
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By Miles van der Molen, CemAir CEO
I am in receipt of Ivo Vegter’s Safair article/keyboard tirade. I wish to share a few thoughts. I wish to point out at the outset that we are not involved in this particular challenge, my understanding is that it has been launched by Lift and Airlink, however we are supportive.
- Alec, as you know I am a huge supporter of yours and Biznews. Unfortunately this means I hold you to a high standard and this article falls short in my view. It is written in a style more aligned with You Magazine or the tabloid press. My preference is for content written with more measure and depth.
- Suggesting that an old law is an outdated law is baseless and to go on to suggest that compliance can then be varied is irresponsible. To publish an article that suggests airlines should follow the rules they believe are sufficiently up to date crosses the line of acceptability in my view.
- Limitations on foreign ownership of airlines is current and generally applied globally. In ASL’s home country of Ireland is no exception.
- Vegter is poorly informed and makes baseless insinuations. The suggestion that the ASLC is being used to address predatory pricing is incorrect. There is a parallel matter to address the pricing complaint which is before the Competition Commission.
- To the best of my knowledge SAA is not involved in the matter. Embroiling them serves only to highlight the author’s bias and lack of objectivity.
- I do not share the view that Safair is a commercial success, my view is that they are currently operating below cost and can only continue with operations because of external funding. Vegter describes how he despises state funded carriers for distorting markets however it is unclear how this model is materially different. Any use of artificial funding to provide a service at below cost to the detriment of competitors and ultimately the flying public needs to be exposed, opposed and terminated.
- At the core of Vegter’s opinion appears to be the assumption that Safair is currently both profitable and sustainable. This is unsupported in the article and not what I believe to be true. My personal estimation is that they are averaging a loss of R100m per month since May last year. Other industry players have arrived at similar estimates.
- The idea that cheaper is always better is immature and shows a lack of commercial understanding. Operating below cost will result in the eventual failure of Safair and the consequences of this will be expensive.
- An industry approach to hold competitors to the rules is not problematic. We all need to work within the framework, whether we agree with it or not, and the suggestion that the industry should allow a player to conduct themselves in any manner they please and simply mind their own business is outrageous.
- The South African airline industry has an extraordinary history of value destruction. This has resulted in the vast majority of new airlines closing, loss of confidence, inconvenience, and billions lost, etc. The industry needs responsible operators to run profitable operations which are economically sustainable and investable.
- Safair was challenged by Comair on this exact issue prior to commencing operations in around 2015. It can be concluded the complaint had merit because Safair restructured their shareholding to comply. It now appears that this compliance was little more than window dressing because in Safair’s own version during 2020 they were not meeting this requirement. Should they be found to not be in compliance, this transgression needs to be viewed in context of this history.
- Even if the shareholding is found to comply (which remains to be seen), a further requirement of the Act is that the 75% local ownership must exercise control of the entity. Should it be found that there are local nominee shareholders while control is exercised from Ireland this must be viewed as deceitful in light of this history.
- We are aware that this matter is being investigated by the ASLC and the IASLC and hope the true control and financial reality of Safair is fully examined. We look forward to their determination on the matter.
I note Vegter’s promise to boycott the remainder of the industry and we are happy to assist in this regard.
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