Aviation minister Ajit Singh on Thursday defended his government’s approval for the entry of UAE-based Etihad Airways, saying ailing state-run Air India, which will face increased competition amid tough times, must learn to fend for itself.
Singh described the Rs. 2,000 crore deal between Jet Airways and Etihad as a win-win deal, which would be beneficial for flyers. “It is a win-win deal, good for the flyers. It provides more competition and more connectivity and better efficiency,” Singh told reporters outside Parliament. Asked whether the deal will escalate the fare war and competition in the market, the minister said, “Competition is always good for any industry”.
On the possible impact on national carrier Air India, which many believe will be worst-hit by the deal, Singh said, “Air India has very limited operations today. If you do not allow other airlines to come wherever they want how will the passengers fly. Air India should look after themselves and gear up.”
Senior government officials pointed out that AI was not equipped to handle the outgoing international traffic alone and it should not be complaining.
“The deal is good for fliers. It is good for civil aviation sector. This will fuel more competition. And, it is better for long-term growth. Air India has to be on its toes,” a senior aviation ministry official said.
Naresh Goyal-promoted Jet Airways announced on Wednesday that it will sell a minority stake to Abu Dhabi-based Etihad Airways for roughly $379 million (around R2,000 crore). The deal is the first since the government in September 2012 permitted foreign airlines to pick up to 49% stake in domestic carriers. Industry experts said the deal would enable Etihad to tap into India’s rapidly growing travel market, providing additional passenger traffic to Etihad’s West Asian, North American and European destinations.