Another South African airline has had its licence suspended – here’s why it could be good news for consumers

 ·10 Aug 2022

The Air Services Licensing Council (ASLC) has suspended Mango Airlines’ air service licence for up to two years – and this may drive up competition in the sector and lower flight costs in the long term.

Speaking to CapeTalk, aviation analyst Phuthego Mojapele said that based on the needs and considerations of the country and its airline industry, the council suspended Mango’s licence as it was regarded useless.

According to Mojapele, the South African aviation sector requires that an airline makes use of its licence when in operation. Mango has, however, been grounded for more than a year, taking up space for new arrivals to the market.

Mango had not had planes in the sky since the end of July 2021, when it submitted itself into business rescue proceedings. Mango was fragile alongside the rest of South Africa’s airline industry, coming off the back of the pandemic.

Mojapele said that the suspension is not an outright revocation, and the airline can recover it if it can prove to the council that it has a necessary plan to maintain its routes within the two-year period.

This follows reporting by CH-Aviation disclosing that, in an update to the airline’s creditors by business rescuer Sipho Sono, an unnamed consortium had presented “adequate and satisfactory proof” of funding to the airline administration.

CH-Aviation reported that the consortium was given until Wednesday, 10 August, to provide a bank guarantee in favour of Mango. However, no such proof has yet been provided.

Good news for consumers?

Despite the suspension of Mango’s licences, Mojapele said that it might bring some good news for consumers.

“There’s very much interest in the industry, and very soon we’ll see a change; we’ll see the prices coming down because the competition will be, very much so, on the market.”

“It’s good for our economy; it’s good for other players that want to come and tap into what’s already available on the market,” said Mojapele.

In late June, Statistics South Africa revealed that in terms of consumer price inflation data, passenger transport by air increased by 45.9% between May 2021 and May 2022.

According to economiststicket prices were expected to surge after Comair was closed in June as the airline that operated domestic British Airways flights and low-cost carrier Kulula was responsible for 40% of domestic airline capacity in the country.

The Bureau for Economic Research (BER) said that in the short term, consumers would feel the pinch of little air traffic capacity, but over the long term, other operators will fill the gap left by Comair.

Mojapele, from an insider’s perspective, said that he has heard of new players with a serious interest in South Africa’s domestic fly space; however, he said cannot divulge names.

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