Agree Now, Or It's A No Deal

Meanwhile, Union civil aviation minister Praful Patel seems to be playing footsie with the Jet-Sahara deal. After giving a go-ahead to the deal, he backtracked a bit and, earlier last month, he put a spanner in it. His take: the government hadn’t received any formal proposal for the deal. It gave the Left parties the window of opportunity to criticise the agreement. CPI(M)’s Nilotpal basu bared his fangs: how will the government rein in a monopolistic situation, both in the market and in the airport infrastructure arena, and whether the issues of shareholder interests have been adequately addressed by the Jet management? Finally, last Thursday, things got sorted out when the government’s aircraft acquisition committee cleared the transfer of Air Sahara’s assets, including parking bays and slots, to Jet.

But another monkey on Goyal’s back is the Monopolies and Restrictive Trade Practices Commission (MRTPC), which is trying to figure out if a monopolistic situation will arise due to the proposed deal. Together, Jet and Sahara will corner over 50 per cent of the domestic market and, therefore, will have the clout to dictate pricing. The rumour is that theMRTPC will ask the Registrar of Companies to provide details of board meetings of the two companies regarding the sale and purchase process. The Directorate-General of Civil Aviation (DGCA) is sitting tightly on approvals relating to sharing of the airport parking bays and flying rights between Jet and Sahara. TheDGCA says there’s no policy to allow trading of an airline’s infrastructure rights after a change in ownership. That’s forced the ministry to quickly formulate new rules regarding m&as.

To clear these regulatory obstacles, Goyal had been advised to make Sahara a 100 per cent subsidiary of Jet, thereby also acquiring the infrastructure rights. But this option is fraught with other problems. Sahara is overstaffed with 5,000 employees (for 27 aircraft), compared to Jet’s 7,000 (for 42 planes). And when the Jet’s top brass asked Sahara employees to either shape up, or face the prospect of being shipped out, the latter went on a strike. Sahara pilots have also been demanding a parity in pay packets with their Jet counterparts, and if Sahara becomes Jet’s subsidiary, this demand will become more vociferous.