The Union Cabinet on Tuesday approved a bilateral air service agreement between India and Abu Dhabi.
In April, the two countries had agreed to allocate an additional entitlement of 36,670 seats per week in addition to the existing entitlement of 13,600 seats per week. The transaction had, however, raised eyebrows as it was announced within hours of Jet Airways and Etihad concluding a Rs. 2,058-crore investment deal. It was alleged that the bilateral deal with Abu Dhabi was a sweetener for the Jet-Etihad deal.
Industry experts had criticised the bilateral pact and had said it was surprising how India agreed to give so many seats in the current market scenario.
Abu Dhabi’s national carrier Etihad Airways had, on April 24, announced that it would purchase a 24% stake in Jet for Rs. 2,058 crore, a premium of more than 20% over the prevailing market price of Jet shares.
A parliamentary committee led by Sitaram Yechury had recommended that the bilateral agreement with Abu Dhabi “be reconsidered by the government to protect our national carrier and the airports of India”.
“The committee feels that the huge premium could be a backhanded way of obtaining access to the huge civil aviation market in India,” its report had said.