In a move that could generate more controversy for the proposed Jet Airways-Etihad deal, Air India has written to the Ministry of Civil Aviation saying that allowing the deal to go through could affect the overall complexion of international air passenger flow to and from India.

Government sources told Business Line that while the letter does not mention Etihad by name, it does point out that if the West Asian carrier picks up a majority stake in Jet Airways, most of the decisions about Jet’s future plans are likely to be driven by the foreign carrier.

Air India’s communication adds that allowing the deal in the current shape could also have an adverse impact on Air India’s prospects as the airline currently operates non-stop flights from India to London, Paris and Frankfurt. In November last year, the Government permitted Air India to operate daily flights from Delhi to Rome-Madrid-Barcelona and Moscow while from winter schedule 2013, the Maharaja has been allowed to launch daily flights between Mumbai and Nairobi.

The exact contours of the deal between Jet and Etihad are still being worked out although it is expected that the foreign carrier will initially pick up a 24 per cent stake. The eventual stake sale could see Etihad getting a majority stake in the Indian airline. Ending months of speculation about the deal, on January 3, Jet Airways had informed the Bombay Stock Exchange that Jet and Etihad were in discussions regarding a potential investment.

Panel set up

Following Air India’s letter, the Ministry has set up a committee to examine the matter. Being the nodal agency for civil aviation, the Ministry’s views could affect the prospects of the deal, analysts feel.

On Monday, the Jet Airways stock closed at Rs 596.55 or 0.11 per cent lower on the BSE.

(This article was published on January 14, 2013)
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