Why 36,000 seats threaten the Jet Airways-Etihad deal

New Delhi: Civil Aviation Minister Ajit Singh today said it is important for India to allow Abu Dhabi-based Etihad Airways to buy stake in Jet Airways, a deal whose opponents, he said, are "long on politics and short on facts. The minister denied reports that he will quit the Prime Minister's coalition government if the deal collapses, and said it's for the Prime Minister's Office to confirm if the deal is on hold.

That is not the case, clarified Dr Manmohan Singh's office this evening.  A statement said that "there is no question of a U-turn" or of a disagreement between ministers and the Prime Minister. However, the statement confirmed that the cabinet will review a decision taken recently to dramatically increase the flights between India and Abu Dhabi. (Read statement by the PM's Office)

Many of the new seats would go to Jet and Etihad; opposition MPs have alleged that the 36,670 new seats which will be added on flights from India to Abu Dhabi were sanctioned to enhance the Jet-Etihad deal. The bilateral agreement was signed on the same day in April when the Jet-Etihad deal was announced.

If the deal is cleared, Etihad will get 24 per cent stake in the private Indian airline for Rs 2,058 crores. This is the first overseas investment in an Indian carrier since India allowed foreign firms upto 49 per cent ownership in its airlines.

Advertisement

In its statement, Dr Singh's office said that it got involved in the agreement over seat entitlements because the Civil Aviation Minister wanted the PM to clear a deal that differed from the recommendation of an inter-ministerial group.

The note says the PM then asked the Finance Minister to meet with the Ministers of Civil Aviation, External Affairs and Commerce to discuss the matter. Based on their recommendations, the PM gave an "in-principle go-ahead" to the seat allocation sought by the Civil Aviation Minister.

Advertisement

Among the concerns that opposition MPs have shared over the bilateral agreement is that Abu Dhabi would get thousands of new passengers on its routes to Europe, Africa and West Asia at the cost of Indian airports.