Another BEE storm brewing in South Africa
Business interest group Sakeliga has filed litigation in hopes of setting aside the Air Services Licensing Council’s (ASLC) inclusion of broad-based black economic empowerment (B-BBEE) requirements into its air service licensing process.
The group argues that the move is a deterrent to both domestic and international investment, potentially stunting job creation and economic growth in the aviation sector.
“By introducing licensing criteria that have nothing to do with operational standards and accountability, these licensing practices are compromising commercial freedom and the availability and safety of local aviation services,” said Sakeliga.
In 2023, the ASLC (which was established to adjudicate applications for air service licenses) introduced a requirement which demanded prospective licence holders to submit a transformation plan and commit to improving their broad-based BEE scores, as part of their licensing applications.
However Sakeliga, which represents more than 12,000 businesses and business people, said that the ASLC’s BEE and transformation requirements in the adjudication of licence applications are “harmful, unlawful, and unconstitutional.”
“Since at least December 2023, the ASLC has been denying and/or frustrating domestic air services providers’ licences by arbitrarily insisting on B-BBEE certification and transformation undertakings,” said Sakeliga in a statement following the filing of its litigation.
The ASLC disagrees and said that it is bound by the B-BBEE Act’s requirements.
Sakeliga argues that the requirements, which are not outlined in the Air Services Licensing Act, is undermining the stability of the industry.
“The Act prescribes that the ASLC must issue licences whenever an applicant complies with requirements on safety, residency, and control and registration of aircraft, and precludes the ASLC from adding additional requirements,” said the business interest group.
Sakeliga stated that applicants invest significant resources to meet current licensing requirements, but the shifting criteria create uncertainty, making such expenditures potentially wasteful.
“There is no basis in law for making race, transformation, or B-BBEE a prerequisite for air services licences.
“By introducing licensing criteria that have nothing to do with operational standards and accountability, these licensing practices are compromising commercial freedom and the availability and safety of local aviation service,” added Sakeliga.
The group additionally warned that the “lack of regulatory clarity” could deter both domestic and international investment.
This, in turn, could lead to missed employment opportunities in the local market.
Sakeliga also accused the ASLC of prohibiting applicants from recording licensing hearings or bringing electronic equipment, despite the Act mandating public hearings.
During these hearings, applicants reportedly face arbitrary, verbal demands regarding BEE and transformation, with no written criteria provided. If panel members are dissatisfied with an applicant’s responses, they are told to reapply after meeting unspecified BEE requirements.
In response, Sakeliga is seeking a court order to:
- Set aside the ASLC’s inclusion of BEE criteria in the licensing process, declaring it unlawful.
- Declare the ASLC’s ban on electronic devices and recording of meetings unlawful.
Sakeliga’s founding affidavit and supporting documents can be found here.
The group are long-time staunch opponents of race-based policies.
On its website, it states that it “envisions a South African economy free from BEE and race-based hiring quotas, where businesses thrive based on value-creation and competitiveness.”
Recently, the group voiced their concerns about what they see as a move from passive ‘administrative’ BEE requirements on smaller businesses to active enforcement of BEE policies.
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