New Delhi : Months after it was signed, the Jet-Etihad deal, which has paved the way for big Foreign Direct Investment of Rs.2078 crores, is now embroiled in a political controversy.
Slamming the government and Prime Minister Manmohan Singh for neglecting national interest, BJP spoke-sperson Syed Shahnawaz Hussain said, “There is something fishy about this deal. Why did the government give away 40,000 seats to Etihad? It should come clean on this matter.”
The reference is to the decision to dramatically increase the flights between India and Abu Dhabi. Many of the new seats would go to Jet and Etihad; opposition MPs have alleged that the 40,000 new seats which will be added on flights from India to Abu Dhabi were sanctioned to enhance the Jet-Etihad deal. The bilateral agreement on seats was signed on the same day in April when the Jet-Etihad deal was announced.
Hussain, a former civil aviation minister, charged that enhancing the share of seats for any particular airline and increasing its ports of call is not a simple matter, and it is something that has far-reaching implications. “We need all the answers, because we surely sense that there is something fishy about this deal,” he added.
As a part of its offensive strategy, the BJP is expected to wait for sometime before unveiling other components of the objectionable parts of the deal. However, its attack has come days after there were media reports that the Prime Minister’s office has sought some clarifications from the ministry of civil aviation. Now even as the PMO has denied that there are any differences in the government on this deal, some details of the objections raised by other stakeholders are emerging.
Although on paper the infusion of equity into the ailing Jet Airways by Etihad at a premium of more than 20 percent, and the bilateral agreement for enhancing Etihad’s seat share are two separate matters, but in reality there would have been no Jet-Etihad deal without the seat share enhancement. Indeed, the timing of the announcement of the deal and the enhancement of the seats confirms the linkage.
However a four-fold rise in the seats allotted to any country in a bilateral agreement is pretty unusual, and in this case since Abu Dhabi has only one airline, the direct beneficiary of the bilateral agreement is just one company — Etihad. The deal has been objected to by airports that are now being run by private operators who have protested that this deal would deny them of a lot of potential revenue.
The Foreign Investment Promotion Board has deferred the clearance of the deal, and it shall now go to the cabinet. Meanwhile, official sources are keen to ensure that this controversy has no impact on the investment climate that is none too attractive, but with different voices emerging from various quarters the deal would not remain unscathed.