The Government has come under fire from yet another parliamentary panel.
The standing committee on civil aviation has slammed the Government’s decision to exchange a fresh air services agreement with Abu Dhabi as “prime facie” a move to facilitate one airline to strike a deal with a foreign airline for selling its stake at a huge premium.
On April 24, hours before India and Abu Dhabi exchanged an air services bilateral, which enhanced to 36,670 seats a week that airlines from the two countries could operate, Jet Airways had announced that it was issuing 2.72 crore preferential shares to Etihad Airways, the national airline of Abu Dhabi, giving the Abu Dhabi airline a 24 per cent stake in Jet.
The allocation of shares was done at a substantial premium to the closing price on the NSE of the previous day. The deal is valued at Rs 2,050 crore.
“The Committee feels that the huge premium could be a backhanded way of obtaining access to the huge civil aviation market in India,” the report which was tabled in Parliament on Friday says.
The Committee, headed by CPI(M) MP Sitaram Yechury, noted that domestic airlines had not exhausted the seats allotted under the earlier, and substantially smaller bilateral agreement between India and Abu Dhabi.
Prior to the bilateral talks between India and Abu Dhabi, Jet Airways sought an additional 40,000 seats a week into Abu Dhabi. In comparison, Air India Express, IndiGo and SpiceJet requested for between 3,000 and 5,000 seats each to operate flights to Abu Dhabi.
The Committee has called on the Ministry to reconsider the agreement for bilaterals with UAE. It has instead suggested that the agreement “may be kept frozen” at the current level of 13,300 seats a week in each direction.
It also called on the Government to not only take away the slots from Jet Airways but also penalise it for selling bilaterals which it says is a national property.
As part of the deal, Etihad has purchased three slots at London Heathrow from Jet for $70 million