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Business News/ Politics / Policy/  No differences within govt on Jet-Etihad deal, says PMO
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No differences within govt on Jet-Etihad deal, says PMO

Some TV channels reported on Monday that Prime Minister Manmohan Singh had strong reservations about the deal

The PMO statement says the increase in seat entitlements was under an inter-government agreement that follows the laws of the land while the Etihad-Jet deal “is a private agreement between two private entities”. Photo: AP (AP)Premium
The PMO statement says the increase in seat entitlements was under an inter-government agreement that follows the laws of the land while the Etihad-Jet deal “is a private agreement between two private entities”. Photo: AP
(AP)

New Delhi: The Prime Minister’s office (PMO) released a statement on Tuesday that sought to downplay reports of differences between senior ministers on Etihad Airways PJSC’s purchase of a stake in Jet Airways (India) Ltd and sought to set the deal apart from India’s bilateral agreement with the UAE increasing seat entitlements on flights between the two countries.

The PMO’s clarification, accompanied by annexures including minutes of meetings and related correspondence, took pains to point out several facts: that approval given to the team negotiating flying rights with the UAE was an “in-principle" one; that the team went ahead and concluded the deal; that a subsequent note to the cabinet secretary from the PMO was not aimed at reversing the decision, but merely to “reflect the sequence of events".

It came in response to media reports in the past few days on the bilateral air services agreement and on the Jet Airways-Etihad transaction. Some reports inferred that the “PMO is playing a role in the Jet Airways-Etihad proposal," the statement said, describing them as “factually incorrect and baseless".

Some television channels reported on Monday that Prime Minister Manmohan Singh had strong reservations about the deal. In a 29 May letter to the PMO, Janata Party chief Subramanian Swamy sought a review of the Jet-Etihad deal on the grounds of national security and a possible quid pro quo between the transaction and the increase of flying rights.

“There is absolutely no disagreement within the government or between the ministers and Prime Minister on the matter. The Prime Minister is neither washing his hands of the bilateral air services agreement nor is the Prime Minister’s Office trying to do a U-turn on the issue now," the PMO said in the statement, which was released on a day the government held a meeting to discuss the security concerns raised by Swamy.

India and Abu Dhabi concluded bilateral talks on flying rights on 24 April with the government agreeing to approve an unprecedented 36,670 seats on weekly flights as well as other aviation sops seen by analysts as benefiting Jet Airways. On the same day, Etihad had announced it was purchasing a 24% stake in Jet at a premium over the Indian airline’s prevailing stock price for $379 million. The PMO’s statement said the increase in seat entitlements was under an inter-government agreement that followed the laws of the land while the Etihad-Jet deal “is a private agreement between two private entities".

It said of the deal: “This is not an agreement between governments and there is no question (of) either backtracking from or disowning this proposal as this is not an agreement with the government."

The PMO said changes in the seat entitlements under the bilateral deals are usually made at the level of the civil aviation ministry and do not need approval from those on a higher level. The agreement with Abu Dhabi came up for clearance by the Prime Minister because the seat entitlements were different from what had been recommended by an inter-ministerial group.

“The Prime Minister directed the finance minister to hold a meeting with the ministers of civil aviation, external affairs and commerce and industry to discuss the matter in detail. The ministers met and agreed to a proposed mandate for the bilateral negotiations," the statement said.

On 22 April, on the day of the ministerial meeting, which was also attended by the national security advisor and the principal secretary to the PM, it was agreed to give in-principle approval to the negotiating team as per the formulation mentioned in the minutes of the earlier meeting. The PMO clarified that the Prime Minister had on 26 April directed that the matter be brought before the cabinet and had sent a reminder on 20 May. The civil aviation ministry sent a note on the impact of West Asian carriers on India’s aviation sector. On 13 June, the ministry was asked to redraft the cabinet note to “reflect the sequence of events and discussions more accurately".

The PMO’s statement also said the Prime Minister had received letters raising concerns over the deal from Communist Party of India members Gurudas Dasgupta and Prabodh Panda, Trinamool Congress member of parliament (MP) Sucharu Ranjan Haldar, Janata Party leader Swamy and Bharatiya Janata Party (BJP) MP Ajay Sancheti.

“Media reports which selectively report some of the above facts or documents or are not based on full knowledge of facts (and) do not reveal the full picture or the detailed discussions that took place on the bilateral arrangements," the PMO said.

Soon after the PMO’s clarification, Communist Party of India leader Gurudas Dasgupta shot off a letter demanding that the Prime Minister take responsibility for the deal and cancel it. The bilateral agreement has been opposed by other Indian airlines as well as Indian airports that believe it will help make Abu Dhabi an aviation hub for passengers from India to Europe and the US, to the detriment of India’s aviation sector.

The Jet-Etihad deal was the first agreement involving foreign direct investment (FDI) by a foreign airline in an Indian carrier after the government in September made a policy decision to allow such investments up to a maximum of 49%.

An airline consultant, who requested anonymity, said bilateral air service agreements entailed a reciprocal exchange of flying rights between two governments.

“No bilateral deals should be based on case-to-case basis, but there should be broad strategic national interest. Ideally, the ministry of finance should be involved in policy formulation on bilaterals to avoid sector specific bias," the consultant added.

Jet Airways had no comment to offer. The airline concluded the agreement with Etihad after four months of negotiations.

No malafide motives can be suspected behind the Jet-Etihad deal, said Ramesh K. Vaidyanathan, founder and managing partner of legal consulting firm Advaya Legal.

“Now, the government cannot reverse the clock," he said. “Jet-Etihad deal was executed after several internal deliberations and the government cannot go back from a step that... had aimed at opening up a sector," Vaidyanathan said.

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Published: 02 Jul 2013, 07:21 PM IST
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