South Africa's Velvet Sky Airlines Grounded due to Financial Problems

There is a rumour milling about that South Africa's LCC Velvet Sky has been hit by a severe cash crisis and there's a possibility that airline might shut down soon due to failure in paying outstanding debts. The airline is said to have run into heavy debts with aviation service providers in South Africa including SwissPort.

Several flights were delayed indefinitely by the airline on Friday and irate passengers were kept on the wait throughout the day. The airline grounded its fleet after failing to pay fees to South African Technical (SAT), a 100%-owned subsidiary of South African Airways (SAA), and is used to repair and maintain the fleet of SAA, Comair (Kulula and British Airways South Africa), Kulula airline, KLM and Air France) amongst others.
Chairman of Velvet Sky, Cecil Reddy, following the launch of Velvet Sky Airlines flights in March  last year
Last week, the airline ditched flights to the Polokwane International Airport with the intention of cancelling its controversial agreement with the Gateway Airport Authority Limited (GAAL). According to the airline spin, the flights were cancelled for "ethical" reasons following a preferential treatment afforded Velvet Sky by the Limpopo authorities exempting the airline from paying Passenger Service Charges. The airline apparently cancelled the flights to protect its "brand image".

Flights to Polokwane wee launched only three months ago and the abrupt cancellation was the first signal to observers that the airline was facing financial difficulties.

According to a source, shortly after Velvet’s landing, its deal with GAAL, the state authority charged with overseeing the management of Limpopo’s airports, became embroiled in controversy. In October, GAAL had offered Velvet preferential concessions that would exempt the airliner from paying certain airport charges. The concessions were understood to be necessary in order to make the route economically viable for Velvet Sky while bringing increasing tourism and business traffic to the Limpopo province, something that was encouraged by Limpopo government officials, keen on giving the province's economy a shot in the arm.

However, SA Airlink - previously the only airliner to run scheduled flights into Polokwane – was not offered the same privileges and the concessions, bringing the legality of the deal between GAAL and Velvet Sky  under question. Citing concerns over its agreement with GAAL, Velvet Sky has now unceremoniously left the building, vacating its offices and pulling its staff from the airport over the weekend.

Travelers to the Limpopo province can once again brace themselves for high fares as SA Airlink regains its monopoly on the route. I might be wrong but Velvet Sky is an airline which will soon drop off the skies.

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