Issued by Ismail Joosub on behalf of the FW de Klerk Foundation on 04/12/2024

South Africa’s aviation industry is undergoing a turbulent period—one that requires careful consideration and decisive leadership. The aviation sector is not only a vital economic engine, but also a key enabler of trade, tourism and global connectivity. Unfortunately, the introduction of Broad-Based Black Economic Empowerment (“B-BBEE”) requirements into the air services licensing process threatens to undermine its growth and long-term competitiveness.

The Air Services Licensing Council (“ASLC”), under the Air Services Licensing Act of 1990 (“ASLA”), has the critical role of regulating air service licenses. In 2023, the council introduced a new requirement: Air service applicants must submit transformation plans detailing how they will improve their B-BBEE scores. While well-intentioned, this move has sparked concerns that it burdens operators with unnecessary requirements and risks conflicting with the existing legislative framework that governs the sector.

Under the Air Services Licensing Act, section 12 makes it clear that no one can operate an air service without a valid license issued in accordance with the Act. Nowhere in the legislation is B-BBEE mentioned as a criterion for obtaining a license. Introducing this requirement would likely exceed the ASLC’s mandate, which focuses on ensuring that air services are safe, efficient and financially viable. By straying from these core principles, there’s a risk of creating unnecessary legal complications that could undermine the industry it seeks to regulate. Section 16(4) of the ASLA is also clear: Licensing decisions should be based on the applicant’s ability to operate a safe, reliable service, with adequate insurance and financial capacity. Safety, financial soundness and operational competence are the key factors. B-BBEE compliance simply doesn’t fit within this framework, which centres on operational competence and safety.

The same concerns extend to the International Air Services Act of 1993 (“IASA”), which governs the licensing of international air services. Like the Air Services Licensing Act, the IASA emphasises operational and financial competence as the primary criteria for granting licenses. Under section 15(1), applicants must provide specific information regarding the nature and scope of their intended service, while section 17(4) further stipulates that the council must ensure the applicant is fit to operate a safe, reliable and financially viable service. Section 16(1) of the IASA establishes a clear procedure for the processing of license applications, underscoring the importance of operational safety, financial estimates and the applicant’s capacity to manage an international air service. Section 17(6) highlights the council’s role in assessing the applicant’s ability to operate a safe and reliable service, taking into account factors such as the experience of the applicant and the financial capability to run the proposed air service. Nowhere in these provisions is B-BBEE compliance mentioned as a condition for obtaining a license.

The constitutional implications are also significant. The right to equality allows for measures to advance and protect (categories of) persons disadvantaged by unfair discrimination (section 9(2) of the Constitution). It is explicitly stated that this is in order to achieve a South Africa where everyone fully and equally enjoys all their rights and freedoms. This underpins efforts to address socio-economic disparities created by apartheid. While this goal is critical, its implementation must be balanced to ensure fairness. Transformation policies must not come at the expense of the technical and operational requirements needed to ensure a robust, competitive aviation industry. Policies that conflate transformation with technical competence create the risk of undermining the very sectors that are key to economic growth.

Critics of the new B-BBEE licensing requirement point out that it might be unconstitutional. Section 9 of the Constitution guarantees the right to equality and prohibits discrimination, yet introducing racial or social criteria into an area determined by operational and technical skill risks violating these fundamental principles. At a time when the global aviation industry is more competitive than ever, such a policy could inadvertently exclude competent operators, prioritising social criteria over merit. This would ultimately harm the aviation sector’s ability to thrive and compete internationally.

Moreover, the lack of clarity and transparency in how B-BBEE scores are assessed adds another layer of uncertainty. The ASLC’s reluctance to disclose detailed criteria on how B-BBEE is factored into licensing decisions creates an environment of opacity and risk. Operators are left in the dark, unsure of how to navigate the transformation requirements alongside the strict technical and financial criteria necessary to succeed in aviation.

In addition, the broader economic ramifications of this policy cannot be ignored. Aviation is a capital-intensive, highly competitive industry where South Africa already faces challenges such as high operational costs and outdated infrastructure. Introducing B-BBEE as a licensing requirement adds a further layer of complexity for both domestic and foreign investors, potentially discouraging much-needed investment in the sector. This is especially concerning given that South Africa’s aviation industry is in direct competition with global players who do not face similar requirements. B-BBEE compliance should not be a barrier that exacerbates the existing difficulties the industry faces.

Smaller, independent operators, who may lack the resources to meet the extensive compliance requirements tied to B-BBEE, are also at risk. These operators could find themselves excluded from the market entirely, not because of their lack of technical competence, but because they cannot bear the financial and administrative burden associated with B-BBEE. Ironically, this may result in less competition and fewer opportunities for transformation, undermining the very principles B-BBEE seeks to promote.

There is no question that South Africa must address the historical inequalities of its past and it is commendable that the government seeks to use policies like B-BBEE to achieve that end. However, the mandatory inclusion of B-BBEE in the air service licensing process should be reassessed. The current legal framework—the Air Services Licensing Act and the International Air Services Act—was designed with a clear focus on technical competence and operational capacity. B-BBEE, while important, should not be an additional condition that distracts from these priorities. Also, the focus should be on providing training that can empower previously disadvantaged people with the necessary technical skills.

In conclusion, while the goal of transforming South Africa’s economy is crucial, we must not allow the aviation sector to be held back by policies that do not align with its core needs. The future of South Africa’s aviation industry depends on its ability to remain competitive and innovative, both domestically and internationally.

A regulatory framework that prioritises technical standards, transparency and fairness will not only support the aviation industry, but also help ensure that transformation policies are implemented in a way that is equitable, sustainable and conducive to long-term economic growth. It’s time for a more balanced, practical approach—one that will allow South Africa’s aviation sector to soar to new heights.