Page 32 - AAA SEPTEMBER - OCTOBER 2013 Online Magazine

INDIA SECTION

INDIA MARKET

India says “no role” in
slot sale at Heathrow
The Indian government has backed
private airline Jet Airways’ decision
to sell parking slots at London’s
Heathrow airport to Abu Dhabi-based
Etihad Airways. In April, Jet Airways
sold a 24% stake to Etihad, along with
a share exchange and commitment
to an injection of US$220 million to
create and strengthen the partnership.
The Abu Dhabi-based airline also paid
US$70 million to purchase Jet’s three
pairs of slots at London Heathrow
Airport through a sale-leaseback
agreement. At present, Jet Airways
continues to use those slots to operate
London services.
But ever since the deal and slot
exchange was announced, the Indian
government has faced accusations that
it played a role in helping the deal go
Jet Airways-Etihad deal gets go-ahead through. The main allegation is that since

Jet Airways has inched a step closer riders. In the first investment since the the slots at London’s Heathrow airport
towards getting US$380 million FDI government relaxed FDI ownership are owned by the Indian government,
after India’s investment regulator gave rules to 49% of local airlines in 2012, and these had been sold by Jet
conditional approval to the carrier to sell Etihad Airways decided to acquire a 24% Airways to Etihad without government
a 24% stake to Abu Dhabi-based Etihad stake in the Indian carrier in April. Under permission or any reimbursement, it
Airways. After months of delay, the the strategic equity alliance, Etihad will amounts to “cheating”.
Foreign Investment Promotion Board subscribe to 27.3 million new shares of The federal aviation ministry has
(FIPB) on July 29 cleared the deal with Jet Airways at 754.74 rupees (US$13.92) termed these allegations as “absolutely
some riders. “We have approved the per share. Etihad’s overall commitment baseless and false” and clarified
(Jet-Etihad) deal with some conditions,” to Jet includes an injection of US$220 that the slots, which are approvals
Economic Affairs Secretary Arvind million to create and strengthen a wide- granted by airports to airports to
Mayaram said, without divulging the ranging partnership. use a runway, were not owned by the
Indian government. Hence, their sale
Jet Airways to buy did not require the government’s
consent or a reimbursement. “The
737 MAXs Indian government or any other civil

Indian carrier Jet Airways is aviation institution in India has no
understood to have placed an order role to play,” an official at India’s civil
for 50 737 MAX aircraft from Boeing aviation ministry said. “This is purely
to expand its fleet and help push a function of Airport Coordination Ltd.
through the mounting competition of Heathrow Airport and the concerned
in the country’s airline market. The airlines,” he asserted.
airline concluded an agreement very So while Jet Airways did not get
recently, worth nearly US$5 billion at on financing options and engines are the Indian government’s permission
list prices, if the rumours are correct. sorted out between the two sides, to sell the slots to Etihad, it “obtained
However, Jet Airways is likely to get an official says. Once concluded, the permission” from India’s central bank
a sizeable discount as companies deal will be the single biggest order under laws law relating to foreign
generally purchase below current list by India’s second largest airline by exchange involved in the transaction,
prices. A formal announcement on the passengers. The aircraft are expected the civil aviation ministry official says.
deal is expected shortly once issues to enter service in 2017. The saga rumbles on.

32 ASIAN AIRLINES & AIRPORTS SEPTEMBER / OCTOBER 2013 WWW.ASIANAIRLINES-AIRPORTS.COM