India-UAE air services pact unconnected with Jet-Etihad deal: PMO

Ajit SinghThe prime minister's office (PMO) has defended the India-UAE (Abu Dhabi) bilateral air services agreement and the Jet Airways-Etihad equity stake proposal, saying the allegations of the prime minister's office (PMO) playing a role in the Jet Airways-Etihad deal are factually incorrect and baseless.

''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 off 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 its release.

Amidst speculation about an overhaul of the Jet-Etihad deal, the PMO today said the bilateral air services agreement and the private equity stake proposal are two different issues and the two cannot be clubbed together.

The first is an inter-government agreement on bilateral air traffic seat entitlements and concerns the governments of the two countries while the second is an equity stake proposal between two private entities, Jet Airways and Etihad.

Such agreements, as they involve foreign direct investment, have to be as per the laws of the land and any government policies in place in this regard.

Being distinct issues and between different categories of entities, the two matters need to be handled separately without mixing them up, it said.

The PMO said changes in seat entitlements under bilateral air services agreements are normally entered into by the civil aviation ministry with its counterparts in other countries. These changes are done through an MoU and do not need approval at higher levels, it added.

However, the minister of civil aviation had, on 22 April 2013, sought the prime minister's clearance for concluding an MoU with Abu Dhabi with a seat entitlement, as the agreement was different from that recommended by an inter-ministerial group, the release said.

The prime minister had then 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 release said.

Later, on the same day, ie, 22 April 2013, the ministers met the prime minister to discuss the matter. The meeting, which was attended by the NSA and the principal secretary to the PM, discussed the pros and cons of the enhanced seat entitlement, including the reasons for the mandate. The meeting agreed to give an 'in-principle' go-ahead to the negotiating team, the PMO pointed out.

The prime minister subsequently asked the civil aviation ministry to bring the issue to the cabinet. To substantiate the matter, the ministry has attached the note sent by the prime minister to the aviation ministry.

Days later, the cabinet prepared a note on the impact Middle east carriers would have on the country's aviation sector.

The PMO felt it necessary to reformulate the note to reflect the sequence of events and the discussions more accurately in order to understand the multiplicity of issues that have a bearing on the matter and the reasoning behind the mandate, the release said.

The ministry noted that the PMO received complaints about the agreement from various people, including Gurudas Dasgupta, Prabodh Panda, Sucharu Ranjan Haldar, Subramanian Swamy, Jaswant Singh andy Sancheti.

Some of these letters were related to the India-UAE (Abu Dhabi) bilateral air services agreement and some were related to the Jet Airways-Etihad equity deal.

The PMO said while the civil aviation ministry examined matters relating to appropriate action on the air services agreement examination and appropriate action, the equity stake deal was referred to the ministry of civil aviation, department of industrial policy and promotion, department of economic affairs and the ministry of corporate affairs for appropriate action, as they were concerned with various aspects of the complaints.

The PMO has attached the following correspondence in this regard to substantiate the matter: