Echoes Of Another Flight

Like the SpiceJet sale, there was no public offer in the $379-million 2013 deal between Jet Airways and Abu Dhabi’s national carrier Etihad Airways. However, unlike the SpiceJet deal where a majority stake was transferred and it qualified for a compulsory open offer, in case of Jet-Etihad, only 24 per cent of Jet Airways stake was picked up by Etihad and as such, it was below the threshold limit for a compulsory open offer under SEBI rules.

Says aviation expert Jitender Bhargava, “During the Jet-Etihad deal I had written to SEBI that a public offer was not done. The Competitions Commission had also asked questions. This is happening again in the SpiceJet case—what prevents SEBI from asking questions or taking them to task for it?” At present, Naresh Goyal holds 51 per cent in Jet-Etihad, Etihad 24 per cent, and the remaining 25 per cent is held by the public.

However, there were many other aspects of the deal which were debated and questioned. To begin with, the Department of Industrial Policy and Promotion (DIPP) had raised objections over the amount of Foreign Direct Investment in the deal which was reportedly above the permissible limits. Questions were also raised over who had effective control of the airline.

One of the issues that came to limelight and was questioned in the deal, cleared by the UPA government, was the increase in weekly seats or bilaterals to Abu Dhabi from 13,300 to almost 50,000 over three years, which was in line with Abu Dhabi’s aim of increasing traffic from India from an annual 10 million to 15 million. This, experts said was being done at the cost of Indian carriers, particularly Air India. Jet’s alleged sale of its parking rights in London—given by the government of India—to Etihad for about $70 million too came under scrutiny and questioning.

Like the SpiceJet deal, Subramanian Swamy had questioned the Jet-Etihad deal too, objecting to the seat-sharing arrangements between India and the uae and requesting the Supreme Court to stay the agreements, claiming they affected Indian interests. The Supreme Court has, however, refused to interfere in the matter till the government takes a final call on the Jet-Etihad deal. The apex court will look into the matter in August.