FlySafair, Harith and CemAir: What Is the Real Issue?

The proposed Harith acquisition of FlySafair has generated the predictable debate about competition, market dominance and ownership.

I think we are looking at the wrong question.

The issue isn't whether Harith should own FlySafair.

The issue is whether South Africa can allow an airline to grow while ensuring that the infrastructure around it remains genuinely competitive.

That is a much more important question.

FlySafair has become successful because it has done something relatively simple very well: operate a low-cost airline efficiently. It has built scale, maintained a strong operational reputation and developed a proposition that works in the South African market.

We should not penalise an airline for achieving that.

In fact, South Africa needs more successful airlines.

The problem arises because Harith is not simply an investor in an airline. It also has an interest in Lanseria Airport. That creates a potential conflict.

An airline competes with other airlines.

An airport provides infrastructure to those airlines.

If the same investment interests are present on both sides, competitors are entitled to ask whether access to the airport will remain neutral.

CemAir has raised precisely that concern.

The better answer is to make the rules around the infrastructure very clear.

Competitors using Lanseria should receive equal treatment.

Airport charges should be transparent.

Access should be non-discriminatory.

Commercially sensitive information must be protected.

And there must be proper oversight when those rules are breached.

If those conditions can be enforced, I don't see why South Africa should prevent investment simply because the investor already has interests elsewhere in the aviation sector.

The bigger issue is scale

There is another point that tends to get lost in these arguments.

South Africa does not have a huge domestic airline market.

We cannot simply assume that more airlines automatically means more competition.

Airlines need scale.

They need aircraft utilisation, network density, purchasing power and efficient operations.

A market containing several financially weak airlines is not necessarily more competitive than one containing fewer financially strong airlines.

We have seen enough airline failures in South Africa to understand this.

The objective should therefore not be to prevent FlySafair from becoming successful.

Nor should it be to allow FlySafair to dominate without constraint.

The objective should be sustainable competition.

That means allowing efficient airlines to grow while ensuring that competitors have a genuine opportunity to compete.

What about CemAir?

CemAir shouldn't simply be dismissed because it is a competitor.

Its concerns deserve to be tested. But there is also a strategic lesson for CemAir. It doesn't need to become another FlySafair.

CemAir's opportunity is to exploit the areas where its own operating model provides an advantage — smaller markets, different aircraft economics and regional connectivity.

And what does Harith bring?

This could ultimately be the most positive aspect of the transaction.

South African aviation needs capital.

It needs infrastructure investment.

It needs airlines that can think beyond the constraints of the domestic market.

If Harith can provide FlySafair with the capital and infrastructure platform to expand into carefully selected African markets, the opportunity could be considerably larger than simply increasing domestic capacity.

My view

I would allow the transaction, subject to strong and enforceable competition safeguards.

The issue is not whether Harith owns FlySafair.

The issue is whether ownership of an airline and interests in aviation infrastructure can coexist without disadvantaging competitors. Historically and all over Africa this is, and has been the case. Consider SAA and ACSA for example.

That is what the regulator should focus on.

South Africa needs investment.

It needs successful airlines. (If the deal stalls then FlySafair will need to seek other ownership due to the outstanding regulatory issues.)

It needs competition.

And it needs infrastructure.

We shouldn't sacrifice one to achieve another.

The objective isn't to protect airlines from competition.

It is to make sure that competition remains possible.