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Jet-Etihad deal: Supreme Court admits PIL, issues notices

New Delhi: The Supreme Court on Tuesday admitted a public interest litigation (PIL) by Bharatiya Janata Party politician Subramanian Swamy, seeking to quash the government’s approval to the deal between Etihad Airways PJSC and Jet Airways (India) Ltd, but refused to grant an interim stay on the transaction.

The bench headed by chief justice P. Sathasivam said that it needs to hear from all concerned parties, including the ministry of civil aviation, department of industrial policy and promotion, directorate general of civil aviation, commerce ministry, foreign investment promotion board, finance ministry, Prime Minister’s Office (PMO) and Jet Airways.

The parties have been directed to respond to the notice within four weeks.

During the brief hearing, Swamy said that the deal, which saw Etihad buying a 24% stake in Jet, was against public interest as there has been a squandering of natural resource—the sky and air space (bilateral flying rights).

The Naresh Goyal-led Jet Airways declined to comment on the court order.

In April, Abu Dhabi-based Etihad agreed to purchase the 24% stake in Jet. India agreed at the same time to approve an unprecedented 36,670 seats on weekly flights between India and the UAE, widely seen as a sweetener for the deal.

The Rs.5,600-crore investment will also allow the loss-making Jet Airways to expand its fleet and pare debt after posting an accumulated loss of Rs.2,806 crore over the past seven fiscal years because of high fuel costs and competition from low-fare airlines such as IndiGo, run by InterGlobe Aviation Pvt. Ltd.

Consulting firm CAPA said in its October report that “the unprecedented opening up of the India-Abu Dhabi bilateral agreement just hours before the announcement of the Jet Airways-Etihad deal created a negative perception of how aviation is managed in India and resulted in a political uproar”.

For Jet, the funding is critical to remain afloat especially after this fiscal, which has seen costs increase as the Indian currency weakened against the dollar.

“The petition is not in the interest of the long-term viability of the airline industry. Any delay in the closure of the deal caused by the petition would have an adverse impact on Jet’s financial leverage in the market,” said Debayan Sen, India practice head for US-based consulting firm Landrum and Brown Worldwide Services.

Jet needs the money if it is not “to go the Kingfisher way”, said an executive with aircraft leasing firm who deals with the airline and asked not to be named. His reference is to Kingfisher Airlines Ltd that was grounded last October, largely because of complications arising from soaring debt and losses.

Shares of Jet Airways fell 3.98% to Rs.356.60 on BSE after the court judgement. The exchange’s benchmark Sensex rose 0.44% to 19,983.61 points.

TANU UJJANIYA

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