In what may come as another hurdle in finalising the equity deal between Jet Airways and Etihad Airways, Air India is set to tell the Competition Commission of India (CCI) that if the deal goes through, the Jet-Etihad combine...

In what may come as another hurdle in finalising the equity deal between Jet Airways and Etihad Airways, Air India is set to tell the Competition Commission of India (CCI) that if the deal goes through, the Jet-Etihad combine will hold a dominant position on the India-Abu Dhabi route.

Sources said Air India will put forward these views in response to comments sought by the CCI before it takes a final call on the deal.

However, Air India’s stance is being questioned by the industry, which says that Etihad’s buyout of Jet will not create any distortion in the market.

In April, before India and the United Arab Emirates enhanced the number of seats that their airlines could operate between the two countries, Air India had a dominant position, operating almost 47 per cent of the seats on the sector.

Higher share

However, there has been a change since then. The allocation of seats shows that of the 24,300 additional seats that have been granted, Jet Airways has 9,496 a week, or 39 per cent of the total allocation, while Air India has 38 per cent at 9,171 seats a week.

In April not only was the deal between Jet and Etihad finalised but India and the UAE also agreed to enhance the number of seats that carriers could operate between the two countries.

The timing of the two incidents led to a furore mainly because Etihad is the only carrier from the Abu Dhabi side and Jet Airways was seeking the maximum number of additional seats from the Indian side to operate to Abu Dhabi.

Indian carriers had argued that the bilateral agreement and sale of stake were linked and will be detrimental to the interests of Indian aviation.

Awaiting clearance

The buyout, which has already been cleared by the Securities and Exchange Board of India (SEBI) and the Cabinet Committee on Economic Affairs, needs the CCI’s nod before it can be finalised.

Soon after the deal was announced it ran into trouble with SEBI and the Foreign Investment Promotion Board (FIPB).

In July, the FIPB cleared the proposal but set riders.

The Board’s provisional nod came after the two airlines assured the market watchdog and the Finance Ministry that effective control and management would not pass into the hands of Etihad, by making changes to the Shareholders and Commercial Cooperation Agreement.

Besides, any changes to the shareholders’ agreement and shareholding pattern will require FIPB clearance.

ashwini.phadnis @thehindu.co.in

(This article was published on November 8, 2013)
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