Mumbai: The secrecy behind the Jet-Etihad deal and the way it was announced within moments of seat enhancement agreement signed between the two countries had the stink of controversy. And you do not need a canine’s ability to smell a controversy in this deal.
The fact that various government ministries have raised questions over the deal is reason enough to believe that more has been given than received in the bi-lateral agreement. As against a mandate to increase weekly seat entitlements for airlines of both countries from 13,300 to 25,000, the civil ministry delegation returned after giving away 50,000 seats.
Reports say that Etihad agreed to the deal only after it was assured of more seats and more ports of call in India. That explains why Etihad agreed to pay a huge 32% premium for acquiring a 24% stake in Jet Airways. Etihad was willing to pay $370 million (Rs 2,050 crore on the day of the deal) for the stake after the seat sharing agreement was announced. Ironically, it is the same Etihad management which rejected an earlier offer of Rs 1,780 crore, saying the price was too high for a loss making company with a negative net worth.
There is little doubt that the seat sharing agreement announcement by the two countries was the deal clincher. However, while Etihad is a government owned national airline, Jet Airways is a private player. In signing the deal, the government has sacrificed the interest of other Indian aviation companies, especially its national carrier Air India. It is the sudden increase in the seat sharing which is the bone of contention among various ministries, including the finance ministry.
03/07/13 Shishir Asthana/Business Standard
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