We cannot allow further deterioration of Indian aviation industry, says Dr Swamy

Dr Subramanian Swamy who launched the book— 'The Descent of Air India' authored by Jitender Bhargava, discusses the turmoil in the Indian aviation industry while Mr Bhargava talks about all that went wrong with the national carrier
 

At an exclusive event, Dr Subramanian Swamy, former minister of commerce and law launched the book—The Descent of Air India authored by Jitender Bhargava, a former executive director of Air India. Having spent more than two decades with Air India, Mr Bhargava knows the issues and problems of the airline and the aviation industry better than most. He, along with Dr Swamy, who in the past has raised questions over the valuation of Jet Airways by Etihad, examines the scenario of the Indian aviation industry and the way forward.
 
Dr Swamy, who spoke at Moneylife Foundation’s second anniversary event on the 2G scam and its implications, spoke on the "Turbulence in the Indian Aviation Industry". A few months back, Dr Swamy raised several questions on the ownership and effective control of Jet Airways, post its deal with Abu Dhabi-based Etihad Airlines and on the security concerns related with the deal. In a letter sent to Prime Minister Manmohan Singh, the former minister of commerce and law had a request to adequately scrutinize the proposal between Jet and Etihad before granting the approval.
 
Bilateral agreements and the Jet-Etihad deal
The deal between Naresh Goyal-led Jet Airways and Etihad Airways, the national airline of the United Arab Emirates (UAE), and the signing of the bilateral between India and Abu Dhabi comprises chain of events taking place one after another. The flow of events makes one wonder whether these incidents were mere coincidence or part of collusion, said Mr Swamy.
 
Dr Swamy mentioned that the deal was against public interest as there has been squandering of air space. He claimed that the deal was cleared against the advice of the Parliament Select Committee and other advisory bodies. Dr Swamy also said that even the CAG has found that there has been reckless allocation of air space to foreign airlines.
 
Dr Swamy has consistently been ahead of his time with his views and unafraid to express them lashed out on the sanction of the Jet-Etihad deal. He said, "All scrutiny and investigation in the past have for one vested reason or another, been suppressed and never been acted upon putting Indian security gravely at risk. The allegations of serious underworld connections from the UAE continue to haunt Jet's ownership and need to be pre-examined by the Intelligence Bureau (IB), Department of Revenue Intelligence (DRI) and other Intelligence services."
 
Not much is known as to what either happened or is happening within the regulatory bodies responsible for clearing this particular deal. The deal was finalised only after receiving appropriate ministerial push. It all started on 14 September 2012 with the Cabinet Committee on Economic Affairs (CCEA) approving the proposal from the Department of Industrial Policy and Promotion (DIPP) to permit foreign airlines to invest up to 49% in scheduled and non-scheduled air transport services in India. In January 2013, officials from both Jet and Etihad met Ajit Singh, minister for civil aviation and Anand Sharma, minister for commerce and industries. After the meeting, Singh confirmed that both the carriers were negotiating a stake purchase deal.
 
The 48-hours between 22nd and 24 April 2013 were most crucial in finalising the Jet-Etihad deal. On 22nd April “under the direction of the Prime Minister” the Cabinet Committee approved the signing of the grant of 40,000 additional bilateral seat rights per week to Abu Dhabi. Ajit Singh convinced PM Manmohan Singh to urgently clear the bilateral deal between India and Abu Dhabi. Prime Minister Singh then directed finance minister P Chidambaram to hold a meeting with Ajit Singh, Anand Sharma, and Salman Khurshid, minister of external affairs.
 
Immediately after this meeting, Chidambaram along with the other three ministers and Shivshankar Menon, National Security Advisor and Pulok Chatterji, principal secretary, met the PM. This time, the PM raised some issues about the bilateral. However, Ajit Singh and other ministers assured the PM that all these concerns were considered while arriving at the enhancement. Immediately after signing the bilateral (thus granting 40,000 additional bilateral seat rights per week to Abu Dhabi), Etihad and Jet finalised their stake purchase deal. As per the proposal, Jet Airways would sell 24% stake to Etihad for about Rs2,058 crore.
 
The prime minister, an inter-ministerial group (IMG), a Parliamentary Committee, the capital market regulator and last but not the least, the competition watchdog have expressed reservations about both the deal as well as the substantial seat enhancement. PM Manmohan Singh expressed reservations about the seat enhancement to 40,000 per week and about Etihad controlling the bulk of seats on the India-Abu Dhabi route. The Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI) have already sought clarity from the domestic carrier about the transaction.
 
It is therefore, obvious that the consideration to be received or already received by Jet Airways was clearly linked and co-related to the value of the bilateral that Abu Dhabi was receiving along with its investment in carrier. The sole beneficiary of the largesse of this bilateral deal was Naresh Goyal and not India as the government wants us to believe.
 
Pending clearance before CCI, the issue is the acquisition of 24% stake in Jet Airways by Etihad Airlines. KK Sharma, former director general of the CCI asks if CCI is totally helpless to clear the deal even if it is anti-competitive, if 210 days have passed from the date of filing of the details of the acquisition before the CCI; or does it have some other options before it? It is not clear as to why despite a clear 30 days from the date of filing of this merger review, no public notice was seen in newspapers. It is possible that this did not happen because of heavy to-and-fro traffic of communications between the CCI and the parties to combination. It is not sure as to what is going on inside the competition agency. However, in view of the position of the law and implementing regulations and the track record of the CCI so far, one can rest assured that the law and regulations are taking their correct course. However, there is a possibility, howsoever remote, that the deadline of 210 days may be projected to look like a great pressure point by the parties to the combination before the competition agency. If they succeed in convincing the CCI to clear the deal under pressure of 210 days without the deal being known to public, that would be a very dangerous precedent. Although such a possibility looks very unlikely even if it is for the sake of argument, such a possibility can happen.
 
Read more about the Jet-Ethihad deal:
 
AirAsia India
Two other deals that were highlighted by Dr Swamy were those of the Tata group. AirAsia India, a low-cost airline, in partnership with Malaysia's AirAsia Bhd and Delhi-based Telestra Tradeplace, was announced in February. Tata-SIA Airlines, is a full-service carrier for which the Tatas teamed up with Singapore Airlines in September. Dr Swamy, has challenged the deal in the Supreme Court. Dr Swamy said he has sought cancellation of Foreign Investment Promotional Board (FIPB) clearance to AirAsia.
 
Dr Swamy said that the deal is fraught with illegalities. He said that the commerce ministries put huge pressure on the civil aviation to allowing foreign direct investment (FDI) in new joint ventures and not only in existing airlines. Dr Swamy pointed out that the FDI rules permit foreign investment in existing airlines, but in the case of AirAsia India there is none. Neither Tatas nor Telestra Tradeplace own or run an existing airline in India. Tata Sons has a 30% stake in Air Asia India, with Arun Bhatia of Telestra Tradeplace owning 21%. Rest 49% is with AirAsia.
 
Air India’s descent 
On the decline of Air India, Dr Swamy highlighted a few reasons: harmful bilateral agreements, all profitable routes of the airlines were shutdown and made available to other airlines. He also mentioned that the airline bought aeroplanes that were probably overpriced and recently they sold these brand new planes as junk to Etihad, at one-third of the buying price.
 
Earlier in the session, Mr Bhargava spoke to the audience on what motivated him to write the book. “It was once an iconic brand and today it is grasping for breath,” lamented Mr Bhargava. He spoke about his book, which chronicles the decline of Air India from the iconic status it once commanded, to its current state. What caused the airline to lose its premier status, when and why did things go wrong, and mainly, who was responsible? In his book, Mr Bhargava detailed all the people and events that led to Air India's downfall. Mr Bhargava gives an insider's account of how an iconic brand was run to the ground by politics, apathy and corruption.
 
“Air India under the legendary JRD Tata was among the best airlines in the world-today it is irrelevant. Worse we aren’t even sure where Indian aviation is headed,” said Sucheta Dalal, founder, Moneylife Foundation. “The privatisation of aviation, the licensing of new entrants has been marked with the most brazen capriciousness, corruption and political interference,” she said.
 
Mr Bhargava, who was the executive director of the airlines till January 2010, mentioned that every decision was being taken by the government as Air India never had a culture of speaking up. Those who voiced their opinion were asked to leave. Instead of implementing decisions that should have been taken, the airline was bleeding because of decisions that should not have been taken. Impractical expansion plans and thoughtless use of the airline's resources contributed to the national carrier's collapse.
 
Highlighting one such instance in his book, Mr Bhargava wrote that when India won the T20 cricket world championship, Praful Patel, former aviation minister who oversaw the airlines for some seven years, awarded the entire Indian Team and their families’ free tickets on Air India for five years. The loss making airlines was also made to spend Rs3.5 crore on advertisements to celebrate the T20 win. A media house, for its annual summit, was given Rs30 lakh verbal commitment of free tickets from Air India, again by Praful Patel, in return for publicity! This oral commitment too was honoured since it was made by the minister.
 
Mr Bhargava brings the force of an insiders’ perspective and the eye of one who watched the decline of Air India’s fortunes almost from the very beginning. He asked some searching questions. Mr Bhargava has written the way he saw it, without embellishment.
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    COMMENTS

    jaideep shirali

    6 years ago

    It makes no sense to keep Air India alive, enough money has been poured down the drain. Our babus, Mr Bhargava included, always spring to life after retirement, just what did they do while in service ? It may be true that AI has not been allowed to function like a business entity, but how many more thousand crores are we to spend to find out whether it was worth it ? This is like another irrigation project, whose cost gallops, completion date is never in sight and cost benefit calculations are then irrelevant. It is easy to play with crores of public money, because it is nobody's personal loss. The AI staff attitude is little better than "public servants", hardly business like even today. AI should be sold off, national prestige be damned.

    Suiketu Shah

    6 years ago

    Wl watch later on moneylife.tv
    One of the few honest politicians Dr Swamy is in India.

    Moneylife Foundation Event: Why every housing society should know the importance of ‘Deemed Conveyance’

    Many housing societies are keen for redevelopment but they cannot go for redevelopment for want of conveyance. Advocate KK Ramani, an expert on realty issues, speaking at a Moneylife Foundation seminar, explained the intricacies of the laws governing housing societies
     

    Many builders have not conveyed the title of properties to the housing societies in the hope of availing more floor space index (FSI) that may become available, or the benefits accrued to them in case the property is redeveloped. The Supreme Court order to demolish unauthorised floors at Mumbai’s Campa Cola compound sent shock waves through flat owners. Six societies were formed in the Campa Cola compound and despite requests made to the builders for conveyance, the same was not done. At an event organized by Moneylife Foundation, Advocate KK Ramani, who has authored several books on property laws, explained the importance of ‘Deemed Conveyance’, TDR (transferable development rights), redevelopment and other issues and the laws governing them. The session received a tremendous response and the auditorium was packed to capacity.
     

    In Mumbai, construction activities are regulated by mainly 2 Acts: Maharashtra Regional Town Planning Act 1966 and D.C. Regulations 1991. The Maharashtra government came out with a special law to enable co-operative housing societies (CHS) get deemed conveyance. A deemed conveyance is a document executed to transfer title of land and building in name of the housing societies, explained Mr Ramani. After receiving complaints against builders for not transferring or conveying the property to the CHS, the concept of deemed conveyance was introduced in Maharashtra Ownership Flat Act (MOFA) amended – on 25 February 2008. The rules were effective from 27 September 2010. However, in Mumbai, where there are more than 23,000 CHS, only 87 have been able to get their deemed conveyance due to several flaws in the new system.
     

    MOFA regulates the construction of property, once the conveyance is done the Maharashtra Cooperative Society Act takes over, said Mr Ramani. Under MOFA the definition of flat is very wide. A builder in the past has sold common areas and amenities. There have been cases where the builder has sold terraces and car parking. Judgements in the past have gone in favour of the society. Mr Ramani said that a garage is an attachment to a flat and cannot be sold seperately Developers have been refusing to issue the certificate to housing societies across the state. In Maharashtra, there are 88,000 such proposals pending for last several decades. Mr Ramani who has been appointed by all the six societies in Campa Cola Compound to procure a deemed conveyance for them, pointed out that there are many legal issues that would arise out of the demolition. For instance, he says, only 96 flats will be demolished, so who will have rights to the remaining FSI after the destruction? If the cooperative societies do not have the title to the land, how can they submit plans for fresh development to the municipal corporation? Mr Ramani outlined the procedure for a society to obtain deemed conveyance if the conveyance certificate is still not yet received.
     

    Earlier in the session, Mr Ramani gave an over brief of the development of Mumbai and the history of Flat System in Mumbai since 1941. Along with the pace of construction and development, existing housing societies were expanding and thus came the need for redevelopment. Many housing societies which have grown old, the cost of reconstruction has gone beyond the reach of many societies, hence, the need for developers. But when one goes for redevelopment, they need to read the fine print very carefully.

    Mr Ramani spoke at length on the different aspects of a redevelopment deals. He spoke about the minimum quorum required for the approval of a developer, the period of development, the security from the developer, alternate accommodation and registration. He cautioned the audience that only after the building is redeveloped, new members should be added.
     

    The session was followed by a lively question and answer session.

     

    NOTE:
    Those seeking help or advice on CHS issues can contact
    Moneylife Foundation’s Legal Resource Centre (LRC) ( http://moneylife.in/lrc.html )

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    COMMENTS

    sharad

    6 years ago

    Sir,

    What can be liabilities of Developer/Builder in deemed conveyance proceedings?? Where these have been outlines (other than MOFA)

    B L Chauhan

    6 years ago

    Deemed conveyance provisions evoked almost NO interest because of still requiring lots of papers and details.If the Govt desires honestly to help the poor flat owners from excesses of Builders n developers then it should award Deemed conveyance just by stoke of a Pen by deciding a cut off date say 1 jan 1995.All buildings which were issued CC ie commencement certificate before this cutoff date would be deemed to be entitled for the Deed of Title ...GOVT should seriously think about it

    Moneylife Foundation seminar - TransformYour Life with NLP

    Neuro Linguistic Programming (NLP) can help everyone improve communication as well as own performance in any activity. Shekhar Naware, well known theatre personality explained this with a delightful presentation

    Moneylife Foundation’s seminar on NLP by well-known Marathi actor Shekhar Naware captivated the audience with a talk on how human communication techniques can be improved to remove the mismatch between personality-types that lead to miscommunication. Techniques to harness the power of your mind to improve own performance in any field was shared by Mr Naware with numerous real life examples
     

    Improving concentration, communicating better, dealing with your fears and giving your best performance any time can be achieved with NLP. It techniques are targeted to produce results.
     

    Proven NLP techniques can be applied to achieve extraordinary results. Simple visualisation of successful outcomes or talking to oneself to bring about positive results are some ways to improving performance in any field and the confidence generated can be repeated in future situations. According to Mr Naware the visual and audio instructions activate the mental resources to take a target and work towards it. NLP is also useful to remove phobias and fear.
     

    Mr Naware has worked with athletes, sports person and actors to dramatically enhance their mental resources to be able to change the outcome of their efforts. Mr Naware gave examples of how a few sessions of NLP training of several Ranji Trophy players in Mumbai made a huge difference to their game. Mr Naware says, “NLP is easy to learn and requires a little application and practice, but remember, this talk is just an introduction to the vast power of your own mind.”
     

    This programme received an enormous response from the audience and we had to close the attendance the day after registration opened. The audience participated wholeheartedly by asking questions relating to meditation, intuition, subconscious mind, hypnosis, etc. Eagerness to learn more about NLP was evident with the enthusiasm of those who attended an enlightening seminar. Moneylife and Mr Naware will conduct a full-day NLP session soon. Watch out for the announcement.

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    COMMENTS

    Sandeep Kotwal

    6 years ago

    This is a great program. I would like to know the details of NLP programs by Mr Shekhar Naware, please guide where I can get the requisite information.

    Sunil Bhagwanji Kapadia

    6 years ago

    Seems very interesting. Hope MoneyLife will host similar full day session at Pune as well, so we all Punekar will have an opportunity to participate.

    Thanks & look forward to _ __

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