Court Bid to Scrap BEE for International Air Licences

Comair and FlySafair have launched a legal challenge at the Constitutional Court, seeking to abolish the requirement for Broad-Based Black Economic Empowerment (B-BBEE) compliance for international air service licences. The airlines are contesting the Department of Transport’s application of the B-BBEE Act 53 of 2003 to the International Air Services Act 60 of 1993, arguing that B-BBEE should not be a criterion for obtaining licences to operate international routes.

Legal Challenge Against B-BBEE

The legal action targets the International Air Services Council (IASC), which, in late 2021, issued a directive mandating a minimum B-BBEE Level 4 for airlines applying for international licences. This directive followed a finding by the Public Protector, who deemed the IASC’s B-BBEE requirements unlawful; however, this finding is also currently being challenged in court. Comair and FlySafair contend that the primary purpose of the International Air Services Act is to regulate air services, not to enforce economic transformation policies, thus making the B-BBEE requirement an unlawful barrier to entry. They suggest this impedes competition and could hinder job creation and tourism development.

Diverse Perspectives on Policy and Practice

The legal battle has ignited significant debate within the aviation sector and broader economic spheres. Advocates for B-BBEE, including the National Black Tourism and Travel Association (NBTTNA) and the Black Management Forum (BMF), emphasize its crucial role in addressing historical economic inequalities and transforming the aviation sector. They highlight the context of state support for state-owned airlines such as South African Airways (SAA), South African Express (SAX), and Mango, asserting that B-BBEE is a vital legal framework for achieving economic transformation and ensuring broader participation in the economy.

The Department of Transport, led by Minister Fikile Mbalula, and the Department of Public Enterprises, under Minister Pravin Gordhan, have both affirmed the government’s commitment to B-BBEE as a fundamental tool for transformation. They suggest that the financial challenges faced by state-owned airlines underscore the necessity of policies that promote broad-based economic participation. Other stakeholders, like the Board of Airline Representatives of South Africa (BARSA), have stressed the importance of consistent policies to promote South Africa as an appealing destination for airlines.

Implications for South African Aviation

The outcome of this Constitutional Court case holds substantial implications for the future of competition within the international aviation sector in South Africa. It will also significantly impact the effectiveness and application of B-BBEE policy, affecting the commercial viability of both private and state-owned airlines. The debate highlights the ongoing tension between national economic transformation objectives and the commercial and competitive realities of the airline industry.

Key Points

• B-BBEE Act 53 of 2003
• International Air Services Act 60 of 1993
• Minimum B-BBEE Level 4

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