Green light for Etihad to take stake in India’s Jet

Etihad Airways appears to have cleared the final hurdle to take a stake in India's Jet Airways.

The final regulatory hurdle to a deal that will see Etihad Airways take a stake in Jet Airways appeared to have been cleared yesterday after India’s competition commission approved the move.

“Considering the facts on record and the details provided in the notice [under the relevant section of the Competition Act] … the commission is of the opinion that the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the commission hereby approves the same,” the Competition Commission of India (CCI) said on its website yesterday.

The CCI had approached Air India for its opinion on the deal before making a decision, reports said this week.

Jet said last month it expected to complete the transaction this quarter.

Etihad announced the agreement in April to acquire a 24 per cent stake in Jet Airways for US$379million.

The Abu Dhabi carrier is investing a further $150m in Jet’s frequent flyer programme and $70m to buy Jet’s six landing slots at London’s Heathrow Airport through a sale-and-leaseback agreement.

Under the deal, Etihad will become the first foreign carrier to buy a stake in an Indian airline after the government in New Delhi last year permitted investment of up to 49 per cent in Indian carriers for the first time.

The deal had been delayed due to scrutiny by regulators and also by opposition from some politicians.

India’s Foreign Investment Promotion Board approved the deal in July, and the cabinet in New Delhi also cleared it last month just days after a green light from the Securities Exchange Board of India. The approvals came after some terms of the deal were revised, media reports said.

In September, the Indian government approved an increase in the seat capacity between Abu Dhabi and India to 50,000 a week by 2015 from 13,300 a week currently.

By the end of this year, Etihad plans to increase its flights between Abu Dhabi and Mumbai and Abu Dhabi and New Delhi from daily to twice daily, it said. The UAE airline also wants to use wide-bodied Airbus aircraft for some of the flights and larger aircraft for its Chennai flights.

Etihad said last month that it had generated more than $1 billion in revenues from passenger services for the first time in the third quarter.

* With Reuters