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.
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