Comair, the once-thriving operator of Kulula and British Airways (BA) in SA, is set to shut up shop permanently after running out of cash, a development that could push local airline ticket prices to record highs and stall the recovery of the tourism industry and the broader economy.

The airline operator — which was once the gold standard on the local aviation scene, going more than seven decades without making a loss — accounted for 40% of airline capacity...