Companies & Sectors
Economy & Nation Exclusive
Jet-Etihad deal: Handing over benefits to Abu Dhabi on a platter

There are 25,000 seats per week vacated by the defunct Kingfisher. The additional weekly seat entitlement of 40,000 by India would only help Etihad whose sole aim is to establish Abu Dhabi as a hub at the cost of Indian airports

The deal between India's Jet Airways and Abu Dhabi-based Etihad Airways has several angles. However, one point that stands out is how the deal was ‘facilitated’ to provide benefit to both the private parties at the cost of India. Especially, signing of the bilateral for enhancing weekly seat entitlement to 40,000 seats between India and Abu Dhabi is turning out to be more beneficial to Etihad than anyone else.

 

Basically, the bilateral covers only Third and Fourth Freedom Rights (as provided in the Convention on International Civil Aviation or Chicago Convention). However, the deal between Jet and Etihad is based more on the Fifth and Sixth Freedom Rights and the bilateral appears to facilitate this. More about the Freedom Rights later.

 

The Indian government has literally given Jet and Etihad the right to pick up passengers from any domestic airport to Abu Dhabi. From here, the passengers would be flown to destinations beyond United Arab Emirates (UAE) like London and New York.

 

However, this requires consent of the third country to which passengers are flown. In this case, the government has chosen to merge its own bilateral flight slots on international routes, which either remain unused or have been given up by domestic carriers like Air India and the grounded Kingfisher Airlines.

 

In February 2013, the Indian government decided to scrap international flying rights and domestic slots of Vijay Mallya-led Kingfisher due to non-utilization. The cancellation of rights of Kingfisher to fly overseas alone created 25,000 seats per week for use to eight countries, including Dubai, UAE, UK, Hong Kong, Singapore, Nepal, Sri Lanka and Thailand.

 

Ideally, this should have benefitted domestic carriers like Air India. However, these vacated slots were adjusted to several destinations beyond Abu Dhabi to be used by Etihad, thus violating the Chicago Convention.

 

The Parliamentary Standing Committee on Transport Tourism and Culture has rightly pointed out this issue in its report submitted in the Lok Sabha on 3 May 2013. Questioning the bilateral agreement, the Committee had said, “Indian carriers are not in a position to use increased seat capacity due to fleet constraints. In such a situation, the foreign airline may try to catch up passenger traffic headed to destinations in North America, Europe, Africa and Middle East resulting in huge losses to Air India and various airports of India.”

 

Emirates Airlines has already established Dubai as its hub point by operating more flights and carrying more passengers to and from India. More than 70% of the passengers carried by Emirates Airlines travel to points beyond Dubai, on Emirates’ network. Etihad is trying to emulate the same for Abu Dhabi with help from the Indian government.

 

The Parliamentary Committee also mentioned about Jet Airways selling three of its slots at London’s Heathrow Airport to Etihad, which was confirmed by the secretary of MCA. This was done without taking any permission from the Indian government. The Committee categorically said, “Carriers have no right to sell the bilateral allotted to them to other airlines that too a foreign airline. The Committee recommends that the government should take away the slots from Jet Airways and the airlines should be penalized for selling the national property—bilateral.”

 

The minutes of the meeting held on 22 April 2013 under the chairmanship of P Chidambaram not only talks about the bilateral but also mentions third country code sharing and air service agreement. Here is the mandate approved for the bilateral air service negotiation between India and Abu Dhabi...

 

1. Additional entitlement up to 40,000 seats per week may be considered in addition to the current entitlement in a phased manner over next few years, preferably 3 to 5 years.

 

2. Third country code sharing [code sharing with designated airline of third country i.e. other than India & UAE (Abu Dhabi)] and domestic code sharing may be allowed.

 

3. Any other issue relating to air service agreement may also be considered in the overall interest of bilateral relationship.

 

On the same day, the Group of Ministers, including Chidambaram, Ajit Singh, minister of civil aviation, Anand Sharma, minister of commerce and industries and Salman Khurshid, minister of external affairs, as well Shivshankar Menon, National Security Advisor and Pulok Chatterji, principal secretary briefed the prime minister.

 

PM Manmohan Singh raised some objection on the bilateral, which was side-tracked after an assurance from Ajit Singh and commerce minister Sharma.

 

The decision was then implemented within 48 hours, and on 24th April, the bilateral agreement between India and Abu Dhabi was signed. This was followed by signing of a deal between Jet and Etihad on the same day. However, signing of the bilateral between two countries and buying stake in Jet is proving to be more beneficial to Etihad.

 

Coming back to Freedom Rights, the International Civil Aviation Organization (ICAO) or Chicago Convention, a specialized agency of the United Nations, looks after coordination and regulation of international air travel. The original document of the Chicago Convention was signed on 7 December 1944 by 52 signatory states. At present, the Chicago Convention has 191 state parties, including all member states of the United Nations—except Dominica, Liechtenstein, and Tuvalu—plus the Cook Islands.

 

The Freedoms of the air are a set of commercial aviation rights granting a country’s airline(s) the privilege to enter and land in another country’s airspace. The First through Fifth Freedoms are officially enumerated by international treaties, especially the Chicago Convention. Several other Freedoms have since been added and although most are not officially recognised under international treaties, they have been agreed by a number of countries. The lower-numbered Freedoms are relatively universal while the higher-numbered ones are rarer and more controversial. At present, there are nine Freedoms.

 

Importantly, Freedoms are not automatically granted to an airline as a right; they are privileges that have to be negotiated and can be the object of political pressures.

 


The First Freedom is the right to fly over a foreign country without landing. The Second Freedom allows technical stops without the embarking or disembarking of passengers or cargo. The Third and Fourth Freedoms allow basic international service between two countries.

 

The Fifth Freedom allows an airline to carry revenue traffic between foreign countries as a part of services connecting the airline's own country. The unofficial Sixth Freedom combines the Third Freedom and Fourth Freedoms and is the right to carry passengers or cargo from a second country to a third country by stopping in one's own country.

 

India and UAE have signed an agreement for only Third and Fourth Freedom Rights, which allows bilateral flights on reciprocal basis between two countries. However, the deal between Jet and Etihad is completely based on Fifth and Sixth Freedom. This is really a cause for concern, as it has the potential to cause premature death of several Indian carriers.

 

Reported by: Yogesh Sapkale

Read More

EXCLUSIVE Jet-Etihad deal: What happened in those 48-hours?

EXCLUSIVE: Jet-Etihad deal: What are the Parliamentary Standing Committee, FIPB, SEBI and CCI worried about?


 

User

COMMENTS

CA PRADEEP AGARWAL

4 years ago

I do agree with Dr Vaidya , it is similar to 2G/3G, so the case might go to SC.

CA PRADEEP AGARWAL

4 years ago

As disclosed in the Papers even Aviation Minister/Ministry is against the deal but who to stop the arrogant Congress, only public at the hustings because they are afraid that it might be the end of Congress.
NOW ONLY HUSTINGS WILL STOP THE CONGRESS

Ankur Bhatnagar

4 years ago

What is meant by "gain" or "loss" in these agreements and complex world of highly regulated international aviation? When we say something is loss to India, does it mean loss to the Indian airlines? But what about the passengers? Is this deal a loss to Indian passengers as well?

There must be lot of horse trading going on somewhere, but I guess this deal could be a gain for the passengers. And that is what should matter. The airlines exist for passengers, not the other way round. More options for flying to US, Europe and Mid East should be good, right?

REPLY

Dr Paresh Vaidya

In Reply to Ankur Bhatnagar 4 years ago

This is a correct point. Passengers will gain if King Fisher seats are now utilized. Unfortunately Parliamentary committees, CAG, Courts - all want more money for the exchequer, not realizing that the money will come from the public. A case similar to 2G/ 3G auctions.

Sadanand Patwardhan

4 years ago

Yogesh Sapkale,

You have hit the bulls-eye with your analysis of Fifth and Sixth freedom rights acquired by Etihad through backdoor by virtue its deal with Jet. I believe those who sell country's interest are called traitors. But, then it seems we entered the new era of Democracy: by, of, and for traitors.

ashwin bahl

4 years ago

The moot point we and our rulers should ponder over is why Indian carriers have not captured the lucrative Indian market, we should have had the worlds biggest airline in the world today.
Why this failure ?
Even private operators have failed in capturing this share, forget Air India, it does not exist !

arif

4 years ago

This is an excellent move by jet and etihad.
Indian passangers have had enough of the rotten service dished out by Indian airline companies.
Indian airports are probably worst in the world, save perhaps, Cuba.
even African coutries have better airports.moving the hub to abudhabi will better the flying experience of passangers.
its time to stop lousy service in the name of nationalism ( which in India means the cronies get richer and by providing the lowest common denominator in terms of service).

Next move should be to hand over immigration, andcustoms at airports to Dubai or Malaysia

REPLY

Ravi

In Reply to arif 4 years ago

While there is logic in what you say nevertheless instead of handing over the whole cake to Etihad it would be better if it was shared between Qatar,Emirates and even some other interested parties. Or else there should be a review option after 1 or 2 years.

Anil Agashe

4 years ago

It is impossible to believe that King Fischer was flying 25k passengers per week to Gulf. if they were they should have been making money!
Air India has no planes to fly so cannot occupy the space created by KF.
Why have we not been able able to create a base here in India say at Nagpur to make it available as a hub ti International carriers?
The attitude we won't do anything to exploit market opportunities and also will not allow others to do it is going to be damaging in the long run.

REPLY

J Thomas

In Reply to Anil Agashe 4 years ago

Well said

RBI’s tough criteria will see only few bank licence applicants succeeding, says Fitch

Successful applicants are likely to be those with financial firepower and strong management to handle the transition and growth, ratings agency Fitch said

Global rating agency Fitch today said the 26 applicants for new bank licences in India have to fulfil tough requirements that are likely to lead to only a limited number receiving licences and developing into substantial banks.

 

The central bank’s objective to address financial inclusion places heavy demands on profitability and capital, and is likely to lengthen the time it takes for a successful applicant to establish a presence, Fitch said in a statement.

 

The Reserve Bank of India (RBI) requires new banks to open one in four branches in rural areas and fulfil statutory reserve requirements—including placing 4% of deposits with the central bank and holding 23% in government bonds from day one.

 

“We believe some entities will find the 40% priority-sector lending targets tough, even though they have around three years to meet them. Infrastructure finance companies with large existing loan portfolios that have little or no prior presence in the required sectors are likely to find the target most challenging,” it said.

 

The strict conditions mean that profitability for new banks is likely to be limited until they secure a strong foothold, it said, adding, the transformation of existing franchises will be slow, as most will have to start from scratch.

 

Successful applicants are likely to be those with financial firepower and strong management to handle the transition and growth, it said.

 

The number of applicants is less than the market’s expectation, reflecting the high barriers to entry and regulatory restrictions that limit the competitive advantage of getting a bank licence—especially for established non-bank financial institutions (NBFI), it said.

 

“We believe the established NBFI applicants may be better placed to switch to bank status. Nevertheless, the move away from their core competencies and well-managed operations into new businesses and unfamiliar risks with additional regulatory hurdles, may put pressure on their capital,” Fitch added.

User

RTI Judgement Series: Provide information after blanking out names of persons, sources

The CIC said, under Section 10 of the RTI Act, information could be provided after blanking out names of persons who the PIO feels may be endangered. This is the 127th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while allowing an appeal, directed the Public Information Officer (PIO) and senior superintendent of police at Central Bureau of Investigation (CBI) to provide copies of final investigation report and note sheets after blanking out names of persons in these records who the PIO feels may be endangered. The PIO had claimed exemption under Section 8(1)(h) of the Right to Information (RTI) Act.

 

While giving this judgement on 26 July 2011, Shailesh Gandhi, the then Central Information Commissioner said, “...the appellant should be provided the information after blanking out the names of persons in these records who the PIO feels may be endangered, or identify the source of information or assistance given in confidence for law enforcement or security purposes.”

 

Noida resident AN Gupta, on 4 June 2010, sought copies of investigation reports on investments of Rs175 crore and Rs23.64 crore by HUDCO in privately placed bonds of Tapi Irrigation Development Corporation and Shakti Resorts & Hotels (SRHL), respectively from the PIO of CBI. Here is the information he sought under the Right to Information (RTI) Act...

 

i) Copies of the complete final investigation reports of the investigating officers and law officers in case of investment of Rs175 crore in privately placed bonds of Tapi Irrigation Development Corporation and Rs23.64 crore in Shakti Resorts & Hotels by HUDCO. (Ref: PE-ACU-VI/CBI/New Delhi).

 

ii) Photocopies of all the note sheets on which investigation reports in case of Tapi Irrigation Development Corporation and Shakti Resorts & Hotels were processed and finally approved/ rejected by the competent authority.

 

In his reply, the PIO stated...

 

“2. In this regard it is intimated that PE 4 (A) 2007-ACU-Vl (relating to the investment made by HUDCO in Tapi Irrigation Development Corporation Bonds) and RC 1 (A)20O8-ACU-VI (relating to advance by HUDCO to Shrishakti Resorts & Hotels) were registered by CBI ACU-VI Branch. Both the said PE and RC were closed after conclusion of the enquiry/ investigation as per the orders of the competent authority.

 

3. Copy of the enquiry report in PE 4 (A)/2007-Vf, containing five pages can be provided on deposit of the prescribed photocopying charge @ Rs2 per page.

 

4. As far as providing photocopies of Note sheet, it is to intimate that this is a privileged document which contains comments of all officers of CBI and is exempted u/s 8(1)(g) of RTI Act 2005.

 

5 As far as providing investigation report/closure report in RC 1 (A)/2008-ACU-VI is concerned, it is intimated that the closure report is still pending consideration before the court of the special judge for CBI cases New Delhi. Since the matter is sub-judice, any information related to the case is exempted under Section 8 (1)(h) of RTI Act 2005.”

 

Not satisfied with the PIO's reply, Gupta filed his first appeal. The First Appellate Authority (FAA), however, upheld the denial of information by the PIO.

 

Gupta then approached the CIC with his second appeal.

 

During the hearing on 8 June 2011, Mr Gandhi, the then CIC, noted that the appellant had sent written submissions to the Commission dated 17 May 2011.

 

The PIO again claimed exemption under Section 8(1)(h) of the RTI Act for denying the information sought. He stated that CBI had filed for closure of the matter but the court rejected the closure report and directed for further investigation vide its order dated 29 January 2011. Therefore, the information sought was not required to be disclosed as it was covered under the exemption in Section 8(1)(h) of the RTI Act.

 

Mr Gandhi asked the PIO to establish how disclosure of the information sought would impede the process of investigation or prosecution.

 

The PIO submitted that the Delhi High Court in its judgment in Surendra Pal Singh vs Union of India WP (C) no16712/2006 dated 10 November 2006 held that “since prosecution of the offender is pending and has not been completed, it cannot be inferred that divulgence of information will not impede the prosecution of the offender. The respondents therefore are justified in claiming exemption under Section 8(1)(h) from disclosure of information sought by the petitioner”.

 

The CIC then reserved the order till next hearing on 26 July 2011.

 

During the hearing, Mr Gandhi, based on submissions of the parties and perusal of papers, noted that the investigation report in case of investment in privately placed bonds of Tapi Irrigation Development Corporation by HUDCO was provided to Gupta vide letter dated 19 July 2010. However, the final investigation report in case of investment in privately placed bonds of SRHL by HUDCO was denied by the PIO on the basis of Section 8(1)(h) of the RTI Act, which was upheld by the FAA.

 

The PIO argued since the court has asked it to further investigate the information sought (about HUDCO’s investment in SRHL) was not required to be disclosed as it was covered under the exemption in Section 8(1)(h) of the RTI Act.

 

Section 8(1)(h) of the RTI Act provides as follows:

 

“8. Exemption from disclosure of information.- (1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,

          (h) information which would impede the process of investigation or apprehension or prosecution of offenders;”

 

Mr Gandhi said, merely because the process of investigation or prosecution of offenders is continuing, the bar stipulated under Section 8(1)(h) of the RTI Act is not attracted; it must be clearly established by the PIO that disclosure of the information would impede the process of investigation or apprehension or prosecution of offenders.

 

Mr Gandhi cited a judgement given by Justice Ravindra Bhat of the Delhi High Court, in Bhagat Singh vs CIC W.P. (C) No. 3114/2007, where it was observed that ...

 

“13. Access to information, under Section 3 of the Act, is the rule and exemptions under Section 8, the exception. Section 8 being a restriction on this fundamental right, must therefore is to be strictly construed. It should not be interpreted in manner as to shadow the very right itself. Under Section 8, exemption from releasing information is granted if it would impede the process of investigation or the prosecution of the offenders. It is apparent that the mere existence of an investigation process cannot be a ground for refusal of the information; the authority withholding information must show satisfactory reasons as to why the release of such information would hamper the investigation process. Such reasons should be germane, and the opinion of the process being hampered should be reasonable and based on some material. Sans this consideration, Section 8(1)(h) and other such provisions would become the haven for dodging demands for information.

 

14. A rights based enactment is akin to a welfare measure, like the Act, should receive a liberal interpretation. The contextual background and history of the Act is such that the exemptions, outlined in Section 8, relieving the authorities from the obligation to provide information, constitute restrictions on the exercise of the rights provided by it. Therefore, such exemption provisions have to be construed in their terms; there is some authority supporting this view (See Nathi Devi v. Radha Devi Gupta 2005 (2) SCC 201; B. R. Kapoor v. State of Tamil Nadu 2001 (7) SCC 231 and V. Tulasamma v. Sesha Reddy 1977 (3) SCC 99). Adopting a different approach would result in narrowing the rights and approving a judicially mandated class of restriction on the rights under the Act, which is unwarranted.” (Emphasis added)

 

From the ruling, the Commission said, it was clear that the PIO, who is denying information under Section 8(1)(h) of the RTI Act, must show satisfactory reasons as to why disclosure of such information would impede the process of investigation or apprehension or prosecution of offenders.

 

“In the instant case, the PIO has denied the information simply on the ground that such disclosure would impede the prosecution of offenders. However, he has failed to explain how such disclosure would actually be an impediment to the process of prosecution, as laid down above by the Delhi High Court,” Mr Gandhi said.

 

The Commission then rejected the contention of the PIO that the investigation report in case of investment in privately placed bonds of SRHL by HUDCO Ltd was exempted under Section 8(1)(h) of the RTI Act.

 

Further, the PIO had denied copies of note sheets on which investigation reports in both matters were processed and finally approved/rejected by the competent authority on the basis of Section 8(1)(g) of the RTI Act arguing that disclosure of the information sought would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes.

 

Mr Gandhi said, “The Commission is of the opinion that there is some merit in the contention that disclosure of copies of note sheets on which investigation reports in both matters were processed and finally approved/rejected by the competent authority may attract Section 8(1)(g) of the RTI Act.”

 

Under Section 10 of the RTI Act, it is possible to severe certain portions of the information before disclosing it to an applicant to ensure that information that is exempt from disclosure under the RTI Act is not disclosed.

 

While allowing the appeal, Mr Gandhi said, after applying Section 10 of the RTI Act, he comes to a conclusion that the appellant (Gupta) should be provided the information after blanking out the names of persons in these records who the PIO feels may be endangered, or identify the source of information or assistance given in confidence for law enforcement or security purposes.

 

The CIC also directed the PIO to provide copies of note sheets on which investigation reports in the Tapi matter and SRHL matter were processed and finally approved/ rejected by the competent authority, after blanking out the names of persons in these records who the PIO feels may be endangered, or identify the source of information or assistance given in confidence for law enforcement or security purposes before 22 August 2011.

 

CENTRAL INFORMATION COMMISSION

                                                                              

Decision No. CIC/SM/A/2011/000313/SG/13671

http://www.rti.india.gov.in/cic_decisions/CIC_SM_A_2011_000313_SG_13671_M_63572.pdf

Appeal No. CIC/SM/A/2011/000313/AG

 

Appellant                                                     : AN Gupta,

                                                                        NOIDA,

                                                                        District Gautam Budh Nagar (UP)

         

Respondent                                                : MC Sahni,

                                                                        PIO & Sr. Superintendent of Police,

                                                                       Central Bureau of Investigation,

                                                                       Anti Corruption - II,

                                                                       5- B, CGO Complex,

                                                                       9th Floor, Lodhi Road, New Delhi

User

COMMENTS

Ranjit Kumar

4 years ago

Best example.
It shows the merits of decision and quality to use reference of important decision to deliver best.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)