Competition watchdog may examine Jet-Etihad deal on its own

Bindu D. Menon Updated - November 21, 2017 at 03:43 PM.

Domestic airline may approach the body soon to seek nod

The Competition Commission of India is unlikely to wait for a formal reference in order to examine the Jet Airways-Etihad Airways deal to ensure that the deal does not create a monopoly in the aviation sector, sources close to the development said.

“The Commission has the prerogative to act on its own in a cross-border acquisition of this nature. However, it is believed that Jet Airways may approach the Commission shortly to seek its go ahead in the deal,” the sources added.

Earlier this week, Etihad Airways, the national carrier of Abu Dhabi, bought a 24 per cent stake in Jet Airways for Rs 2,054 crore ($379 million).

Just before the deal was announced, India and Abu Dhabi exchanged a new bilateral air services agreement that sharply increases the number of weekly flights that carriers from both countries will be allowed to operate between the two countries.

The agreement will see Jet Airways, Air India, IndiGo and SpiceJet from the Indian side and Etihad from the Abu Dhabi side offering a total of 36,670 seats a week in each direction, over the next three years.

At the moment, the airlines are allowed to operate about 13,300 seats a week.

The equity sale deal between Jet and Etihad would increase the combine’s global strength to cover as many 140 destinations providing direct foreign connectivity to Indian passengers from 23 metro and non-metro cities. Also, under the agreement, Jet and Etihad will explore joint purchasing opportunities for fuel, spare parts and equipment, among others.

Indian carriers including the state-owned Air India, as well as private sector airports in the country have raised concerns about the deal. Airlines from India claim that India and Abu Dhabi did not need to exchange more air seats between each other as the existing air services agreement has not yet been fully utilised.

At the moment, airlines from Abu Dhabi and India use about 80 per cent of the seats that they have been allowed to operate. Jet Airways, however, says that it is incorrect to say that the India-Abu Dhabi bilateral, that allows airlines from both sides to operate regular flights, is not fully utilised.

Airlines also allege that the tie-up between Jet and Etihad will see Indian passengers being diverted via Abu Dhabi on their journey onwards to the US, Europe and Canada.

According to the Competition Act, all high-value merger and acquisitions with combined turnover of Rs 4,500 crore or more need the approval of the competition watchdog. Jet and Etihad expect the deal to go through in the next two to three months.

> bindu.menon@thehindu.co.in

Published on April 26, 2013 16:40