Etihad Airways has formally approached the Competition Commission of India to seek its nod for its acquisition of a 24 per cent stake in Jet Airways. The deal is valued at Rs 2,054 crore. The application to CCI was made on Wednesday evening.
Meanwhile, according to reports, Jet has also sought Foreign Investment Promotion Board (FIPB) approval to sell 24 per cent stake in the company to the Gulf carrier.
The deal was announced on April 25 making the buyout one of the first foreign investments in an Indian airline since ownership restrictions were liberalised in September 2012.
Interestingly, the deal is one of the first transactions in the airline sector to be notified to the Commission. Besides CCI, the deal has to be vetted by the Foreign Investment Promotion Board and the shareholders of the company.
CCI will examine whether the deal creates a monopoly situation in the aviation industry.
According to the terms of the deal, the equity sale between Jet and Etihad would increase the combined 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 Air India and private sector airports in the country too 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.
Airlines also allege that the tie-up between Jet and Etihad will see Indian passengers being diverted over Abu Dhabi on their journey onwards to 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 approval from the competition watchdog. Jet and Etihad expect the deal to go through in the next two-three months.