Ministry defends itself on sale of Jet slot in Heathrow to Etihad

New Delhi: The aviation ministry on Monday issued a clarification defending the government in the deal between Jet Airways (India) Ltd and Etihad Airways PJSC, the second such in a month by a government department.

add_main_imageEtihad’s investment in Jet Airways has become an embarrassment for the government because of allegations that it played a role in helping the private deal go through.

In its latest clarification, the ministry seeks to distance the government from Jet’s decision to sell prime take-off and landing slots at London’s Heathrow airport to Etihad.NextMAds

“The main allegation is that the slots at Heathrow Airport are owned by the Government of India and not Jet Airways and that they have been sold by Jet Airways for consideration to foreign carrier (Etihad) without permission of the Government of India and without reimbursement of this consideration to Government of India, which amounts to cheating,” the civil aviation ministry said in a five-page clarification

“These allegations are absolutely baseless and false. The entitlements/allotments of traffic rights to Indian carriers and availability of slots at foreign airports (Heathrow) are two different matters. In the case of slot allocation at Heathrow Airport, Government of India or any other Civil Aviation Institution in India has no role to play. This is purely a function of Airport Coordination Limited of Heathrow Airport and the concerned airlines,” it said.

Jet and Etihad signed a deal on 24 April, the same day the government reached an air services agreement with the United Arab Emirates that gave Abu Dhabi-based Etihad an additional 36,670 seats a week on flights to and from India.

On 2 July, the Prime Minister’s office in a clarification sought to downplay reports of differences between senior ministers on Etihad’s purchase of a stake in Jet and sought to set the deal apart from India’s bilateral agreement with the UAE increasing seat entitlements on flights between the two countries. In the latest clarification, the aviation ministry appeared to back Jet’s decision to sell its slots at Heathrow airport, saying the airline had sought all the clearances required for the sale.

“Jet Airways has transferred to Etihad three pairs of slots at Heathrow Airport, London which has been confirmed by the Airport Coordination Limited, the slot coordinator for Heathrow Airport. No permission from Government of India/Ministry of Civil Aviation was required,” it said. “However, Jet Airways has obtained permission from Reserve Bank of India under FEMA (Foreign Exchange Management Act) because foreign exchange was involved in the said trading.”

The clarification comes days before Etihad’s proposed investment in Jet is to be taken up for approval by the Foreign Investment Promotion Board on 29 July, ahead of the 31 July deadline agreed between the airlines to close the $900 million deal that includes $70 million for the Heathrow slots.sixthMAds

Jet’s stock has slumped 32% since the deal was announced on 25 April. On Monday, the stock closed nearly unchanged at ₹ 372.05 a share.

The ministry also denied that national flag carrier Air India Ltd had been trying to operate more flights to Heathrow airport but was unable to do so due to unavailability of slots. Air India is utilizing only three pairs of slots at Heathrow airport as against four pairs of slots allocated to it, the ministry said. One pair remains leased out to Delta Airways, it said, replying to allegations that the national carrier’s interests had been compromised.

An analyst termed the latest clarification as a spin.

“Irrespective of the spin the ministry of aviation wants to give to justify both aspects of Jet-Etihad deal—FDI (foreign direct investment) and giving of bilaterals—is untenable and not in national interest,” said Jitender Bhargava, former executive director of Air India. “The aviation minister needs to answer the nation if there is any country in the world which has bartered its interests the way it’s been done in the case of Jet-Etihad deal.”

Mohan Ranganathan, aviation analyst and member of the government-appointed aviation safety council, agreed.

“When the ministry starts defending a private party deal, you know the deal is questionable,” he said.