With CCEA approval, runway clear for Jet-Etihad take off
Clearing the decks for the biggest foreign investment in the country's aviation sector, the Cabinet Committee on Economic Affairs (CCEA) Thursday gave its nod for Rs 2,058 crore stake sale deal between Jet Airways and Abu Dhabi-based Etihad Airways announced in April this year.
The deal should result in wider international connectivity for Indian flyers, especially those flying from tier-II cities, as Jet plans to offer international connectivity from 23 cities in the country through the Abu Dhabi hub.
The deal, entailing a 24 per cent stake sale by Jet to Etihad, was cleared by the Foreign Investment Promotion Board (FIPB) in July. "The Cabinet has cleared the deal. There are no regulatory concerns left, as all of it were addressed by the FIPB," civil aviation minister Ajit Singh told reporters after the meeting.
The airline will now have to apply to the civil aviation ministry and the Directorate General of Civil Aviation for approvals. An approval from the Competition Commission of India, which is reviewing the deal, is also awaited.
As part of the deal, beyond the Rs 2,058 crore, Etihad is also expected to invest Rs 1,188 crore in the Indian carrier to strengthen the "wide-ranging partnership" between them.
Of this, the foreign carrier will pump in Rs 810 crore by way equity investment in Jet Airways' frequent flyer program 'Jet Privilege' while the remaining Rs 378 crore has already been paid to Jet for three pairs of slots that it has at London's Heathrow Airport under the 'sale and lease back agreement'.
With the CCEA clearance, the Indian aviation sector will see the entry of a foreign airline in a little over 12 months after the government relaxed the sectoral foreign direct investment limits in September last year. Following the move, foreign carriers were permitted to own up to 49 per cent in Indian airlines.