Commercial Law Index

South African Airways (SAA) received government funding on four occasions (since 2007). The applicant contended that SAA’s operation was non-commercial, anti-competitive and prejudicial to other air transport services. The decisions to issue a R5.6 billion guarantee to SAA on 26 September 2012, and to extend the guarantee’s period, were the subject of the review. Applicant argued that the decision was unlawful and ultra vires of the Public Finance Management Act; violated the separation of powers; violated sections 7(2), 9, and 22 of the Constitution; irrational; procedurally unfair; and in violation of Comair’s legitimate expectations.

The court held that pronouncing on the legality of the first decision was moot as there would be no utility in the order or in pronouncing on the issues related to it. It was separate from the extended guarantee. Furthermore, the court found that it did not have jurisdiction to decide issues based on Competition Law. The court also held that it was not in its jurisdiction to decide on matters of policy, to which the decision to issue the guarantee amounted.

Due to the dynamic nature of the market, need for flexibility, and to intervene in the dire circumstances of SAA as a strategic asset, the court held that there was no basis for forming a legitimate expectation by the applicant. The court also held that the decision was rational as it considered all relevant factors and involved multi-level input from different governmental departments.

The application was dismissed with no order as to costs.