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House panel flays govt for air services deal with Abu Dhabi news
04 May 2013

The parliamentary standing committee on civil aviation has come down heavily against the government's decision to enter into a new air services agreement with Abu Dhabi only to facilitate an airline deal.

The new aviation agreement was ''prime facie'' a move to facilitate one airline strike a deal with a foreign airline for selling its stake at a huge premium, the committee observed.

Shortly after Jet Airways announced that it was issuing 27.2 million preferential shares or a 24 per cent equity stake to Abu Dhabi's national airline Etihad Airways, on 24 April, India and Abu Dhabi exchanged an air services bilateral, which enhanced seats a week that airlines from the two countries could operate to 36,670.

Jet Airways allocated the shares at a substantial premium to the closing price on the NSE of the previous day. The deal was valued at Rs2,050 crore.

''The committee feels that the huge premium could be a backhanded way of obtaining access to the huge civil aviation market in India,'' the report tabled in Parliament today says.

The committee, headed by CPI(M) MP Sitaram Yechury, noted that domestic airlines had not exhausted the seats allotted under the earlier, and substantially smaller bilateral agreement between India and Abu Dhabi.

Prior to the bilateral talks between India and Abu Dhabi, Jet Airways sought an additional 40,000 seats a week into Abu Dhabi. In comparison, Air India Express, IndiGo and SpiceJet had sought between 3,000 and 5,000 seats each to operate flights to Abu Dhabi.

The committee has called on the ministry to reconsider the agreement for bilaterals with UAE and has instead suggested freezing of the agreement at the current level of 13,300 seats a week in each direction.

It also called on the government to not only take away the slots from Jet Airways but also penalise it for selling bilaterals which it says is a national property.

As part of the deal, Etihad had also acquired three slots at London Heathrow from Jet for $70 million.

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House panel flays govt for air services deal with Abu Dhabi