In the first such deal after foreign direct investment
norms for the airline industry were liberalised in September last year, the Abu
Dhabi-based Etihad Airways will pick up a 24 per cent stake in the troubled
carrier, Jet Airways, at a cost of Rs. 2,058 crore ($379 million).
On Wednesday, the Board of Directors of the Indian
carrier approved the stake sale in terms of which Etihad will be investing $600
million, including $70 million paid to Jet for its landing rights at London
Heathrow airport. Within the next six months, the gulf carrier will also buy a
majority stake in Jet’s frequent flyer programme, JetPrivilege, for $150
million.
With expanded code-sharing and a combined network of 140
destinations, the Etihad-Jet marriage promises to offer significant passenger
benefits.
Jet’s passengers from 23 cities will gain direct access
to Etihad’s global network. The Indian carrier will enhance its services from
its primary hubs of Delhi and Mumbai, and introduce new flights from Hyderabad
and Bangalore. The strategic alliance will bring additional traffic,
frequencies and revenues to metro airports, as well as other airports of the
Airports Authority of India (AAI), the airlines said in a joint statement. They
will open new India-Abu Dhabi routes, and Jet will establish a Gulf gateway for
flights to the U.S., Europe, Africa and the Middle East.
Etihad Airways currently flies to nine Indian
destinations with a total of 63 flights a week. The partnership will also help
to drive a significant increase in traffic growth through Abu Dhabi
International Airport, as well as Jet Airways’ hubs of Mumbai and Delhi.
For both airlines, the key benefits will flow from
synergies and cost savings in many areas, including fleet acquisition,
maintenance, product development and training. The airlines will explore joint
purchasing opportunities for fuel, spare parts, equipment and catering
supplies.
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