No threat to the Jet-Etihad deal: Ajit Singh

Cornered by opposition leaders objecting to the foreign direct investment deal between Jet Airways and Abu Dhabi's Etihad, Civil Aviation minister Ajit Singh on Wednesday (July 3) lashed out at his critics and said the controversy would have no impact so long as Jet was able to allay the concerns raised by market regulator Securities and Exchange Board of India (SEBI) and the Foreign Investment Promotion Board (FIPB).

He added that the alleged opposition to the deal from some of his fellow ministers also did not hold water.

SEBI has raised objections over the 'effective control' of an Indian carrier, Jet Airways, by a foreign player, Etihad, that the deal seemed to suggest and has asked both the airlines to clarify the issue.

The foreign direct investment (FDI) guidelines clearly state that the control of an airline has to be with the Indian company. In this case, SEBI felt that Etihad would have more than desired control over not only Jet's management but also on the airline's day to day functioning.

"The issues raised by SEBI are valid and legitimate concerns and we are waiting for Jet to clear those hurdles first. After those issues are resolved, the matter will be taken up by the Cabinet (as directed by the PM). The other issues were clarified by the Cabinet Secretary after the Cabinet meeting yesterday (Tuesday)," Singh told Business Today.

The Rs 2,058 crore Jet-Etihad equity deal that was in works for nearly a year was announced in April and is awaiting clearance from Sebi and FIPB and also the Competition Commission of India.

Singh said the deal with Etihad 'beats all other agreements done so far'. From both the aviation point and investment points of view, the deal was the best for the sector and the country.

"Air India estimates show that international traffic will grow at nine per cent year-on-year and Indian carriers do not have that kind of capacity currently. Also, for passengers, the deal will open up new ports of connectivity and allow them to fly directly from their regions instead of depending on Delhi and Mumbai for international connectivity. The deal between Jet-Etihad is a deal among equals," Singh said.

Singh also rubbished the argument that there are security concerns if Etihad was allowed to fly more within India.

"Etihad has only been given more flights (in the recent bilateral agreement). We have not increased their ports. And they have been flying to India for eight years now, why were no security concerns raised earlier?" he questioned.

On the issue of bilaterals and giving away of more seats to Etihad - 36,000 seats, a key point raised by Opposition leaders - Singh said this was not the first time an airline had been awarded so many seats. In the past too, the ministry had granted Middle East carriers and European airlines these many seats.

"The deal is being opposed because the elections are nearing. It is a political issue," he said.

Meanwhile sources at Jet Airways said that the recent controversy had led to fears that the deal could be delayed.

"We were in the process of resolving the concerns raised by SEBI as those concerns were deal related. But these recent allegations will just delay the deal a bit and both parties might have to renegotiate the timeline," said a Jet official who did not want to be identified.

The opposition to the deal, the first one after the government announced changes last September in FDI norms relating to aviation - for the first time allowing foreign airlines to pick stakes in their Indian counterparts -  was raised by a Parliamentary Standing Committee headed by CPI(M) MP Sitaram Yechury. Senior BJP leader Jaswant Singh and Janata Party chief Subramanian Swamy also stoked the fire by shooting off letters to the Prime Minster questioning the deal.

The Prime Minister has referred these concerns to various ministries, including the civil aviation ministry.