New Delhi: Jaswant Singh, leader in the main opposition Bharatiya Janata Party, has written to Prime Minister Manmohan Singh, seeking an investigation into an alleged collusion between government officials and the managements of Etihad Airways PJSC and Jet Airways (India) Ltd.
The United Arab Emirates-based Etihad in April agreed to buy a 24% stake in Jet on the same day the Indian government offered aviation sops to Abu Dhabi.
Former railways minister Dinesh Trivedi, a parliamentary committee led by Communist Party of India (Marxist) leader Sitaram Yechury, and Janata Party chief Subramanian Swamy, too, have strongly criticized the arrangement.
India and Abu Dhabi concluded bilateral talks on flying rights on 24 April. India agreed to approve an unprecedented 36,670 seats on weekly flights between India and Abu Dhabi as well as other aviation sops seen by analysts as indirectly benefiting Jet Airways.
On the same day, after four months of talks, Etihad announced it was purchasing a 24% stake in Jet Airways at a premium over the Indian airline’s prevailing stock price for $379 million.
“Immediately upon the signing of this bilateral agreement with UAE, Etihad Airways, their national airline (of Abu Dhabi), announced investment of more than Rs.2,000 crore in Jet Airways at a premium of more than 20%,” Jaswant wrote in a letter to the Prime Minister late in May, which Mint has reviewed.
“This is very curious coincidence, leading us to suspect that the entire matter is collusive. I am sure you will agree that national good can simply not be placed in jeopardy in this manner. I learn, with concern, that this agreement with UAE, as cleared by a group of ministers, has been concluded under your instruction,” he wrote. Jaswant Singh also attached a copy of the minutes of a meeting headed by finance minister P. Chidambaram on the directions of Manmohan Singh.
Mint first reported the minutes of this meeting on 7 May, in which the “mandate was approved for the proposed bilateral air services negotiations” with Abu Dhabi.
Commerce and industry minister Anand Sharma, external affairs minister Salman Khurshid and aviation minister Ajit Singh were also present in this meeting.
“May I, therefore, urge you to please order an appropriate agency to enquire about the collusion of concerned government agencies with private party leading to this bilateral agreement and the impending transaction between Etihad Airways and Jet Airways,” Jaswant Singh wrote. “Also, therefore, pending such investigation, implementation of this bilateral agreement with UAE may please be kept in abeyance and all concerned agencies of the government be advised accordingly. I am sure you will appreciate the adverse consequences of this proposed agreement as it will affect not just the country’s civil aviation sector but more importantly our national security.”
The revival of Air India Ltd, for which the government has agreed to provide $6 billion, is expected to be the most affected as a result of the Jet-Etihad alliance, Jaswant Singh wrote. “It is a matter of concern that on the one hand government is expanding large sums of money to lift Air India out of its financial difficulties and on the other taking such measures as would certainly be detrimental to the airline’s future,” he said in his letter.
The higher seat access to Abu Dhabi was allowed despite criticism by the Comptroller and Auditor General of India of the government’s grant to increase flying rights to Dubai between 2005 and 2010.
Dubai-based airlines had the rights to operate flights with 10,400 seats a week to India in 2003-04 to six cities. This was increased to 54,200 seats a week by 2008-09 to 14 cities.
The rights benefiting Dubai-based Emirates Airline were granted when Praful Patel was the aviation minister. CAG said in an audit report that India’s interests were not protected in the bilateral talks with Dubai and that more flying rights should not be granted until India had its own hub.
Trivedi, the former railways minister and a member of the parliamentary standing committee, in a 20 April letter to the Prime Minister, too had opposed Jet’s request for allowing more seats to Abu Dhabi saying that would affect Air India’s prospects and dash any plan to turn Indian airports into hubs for air travel. Mint reported this on 22 April.
The Yechury panel has asked the government to reconsider the aviation ministry’s agreement with Abu Dhabi and sought the recall of grants given to Emirates in the past.
“The committee as well as CAG (in 2011) have already commented about lucrative routes of Air India generously given away to other foreign carriers on bilateral agreements resulting in huge national losses,” the panel said in its April report. “It should not be repeated.”
On 20 June, Swamy who has taken on the government over allegations of wrongdoing in spectrum allocation in the telecom sector, asked the Prime Minister to investigate the Jet-Etihad deal and questioned how flying rights to Abu Dhabi were increased on the same day the deal was announced. He threatened to take the issue to the Supreme Court.
“This arbitrarily determined entitlement, tantamount to free provision of India’s sovereign airspace to a foreign airline, hence fraught with serious national security issues,” said Swamy in the letter, which Mint has reviewed.
“Aviation ministry must be seen to be fair, just and equitable and work for the larger interest of the country in this regard,” said Shakti Lumba, an independent aviation consultant who formerly was with Air India and low-cost carrier IndiGo. “It obviously hasn’t, hence the objections.”
Jet Airways did not offer any comment on the questions of a possible “collusion” between government officials and its management. Eithad said it will make any fresh announcement only if it has anything more to say.
“Etihad Airways’ equity investment in Jet Airways is now going through the required regulatory approval process. When this process is complete and if considered appropriate, we will be happy to expand on the information already made public,” an Etihad spokesman said, declining answers on questions related to a possible collusion.
Jet’s stock has dropped to Rs.449.45 a share from Rs.635.20 on 25 April, the day after the deal was announced. Etihad is buying Jet shares at Rs.754.74 each.