Page 20 - AAA JULY - AUGUST 2014 Online Magazine

FEATURE JET ETIHAD

Fresh Trouble

The Jet-Etihad deal has been going through turbulent times By Subodh Agarwal

The deal beTween india’s JeT Jet had sold a 24% stake to Etihad Etihad’s overall commitment to Jet
Airways and Abu Dhabi-based Etihad last year, marking the first cross border includes an injection of $220 million to
Airways may run into fresh trouble as transaction in India’s aviation sector since create and strengthen a wide-ranging
Singapore’s competition watchdog has a change to the country’s ownership laws partnership between the two carriers. In
initiated an inquiry into a possible violation was announced in 2012. addition, Etihad has also paid $70 million
of its trade laws. India’s anti-trust regulator Competition to purchase Jet’s three pairs of slots at
“The Competition Commission of Commission of India (CCI) approved the London Heathrow Airport through a sale-
Singapore (CCS) is seeking feedback on stake purchase by Etihad in November leaseback agreement last year.
the proposed commercial alliance between 2013. Last month, India’s capital markets Majority ownership of Jet Airways will
Etihad Airways and Jet Airways,” says a regulator Securities and Exchange Board remain with Indian nationals and Naresh
statement issued by CCS on their website. of India relieved Etihad from making an Goyal, Jet’s founder and non-executive
“CCS received a notification for open offer for acquiring a 24% stake in chairman, will hold 51% of the airline after
decision on 6 June 2014, with regard to Jet, clearing the last block in the deal. the deal, which is subject to shareholder
the proposed commercial alliance. This The notification is made in relation approval. Jet’s board of directors has
(alliance) relates to the provision of to Section 34 of the Competition Act of approved the deal.
international air passenger transport Singapore which prohibits agreements The deal calls for Jet to establish a
services (and associated support services), between undertakings, decisions gateway in Abu Dhabi, and expand its reach
with a specific focus on the Singapore by associations of undertakings or through Etihad’s network.
origin and destination city pairs affected concerted practices, which have as Airline experts in India say Singapore
by the proposed commercial alliance,” the their object or effect the prevention, should look at new ways to offer better
statement further adds. restriction or distortion of competition competition on the routes rather than
The CCS, which is in-charge of within Singapore. opposing the deal. They feel the chances
investigating alleged anti-competitive The Jet-Etihad alliance, a CCS official of the agreement running into turbulence
activities and applying suitable remedies, explains “includes pricing, route and were “less likely.”
will take a final decision on the deal after schedule coordination, marketing, code- The deal has been going through
it receives feedback from the public and sharing, networks, customer service and turbulent times ever since it was
other stakeholders. resourcing decisions between the parties.” announced.
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