July 12--NEW DELHI -- Jet Airways (India) Ltd's founder-chairman Naresh Goyal has, surprisingly, found a place in a new committee formed by the civil aviation ministry to boost ties with the United Arab Emirates (UAE), even as the deal he struck to sell a 24% stake in Jet Airways to the UAE's national airline hangs fire.
Aviation secretary K.N. Srivastava, joint secretary Prabhat Kumar and Air India Ltd chairman Rohit Nandan are also on the committee formed in the aftermath of a controversy triggered by allegations that the Indian government had sweetened Jet's $379 million (around Rs.2,260 crore today) deal with Etihad Airways PJSC with a generous increase in flying rights to the airline.
"It's surprising, yes, but then it is what it is. We were also surprised," a person with direct knowledge of the matter said, referring to a potential conflict of interest stemming from the inclusion of Goyal in the panel put together in the past fortnight.
"The mandate (of the committee) is to look into India-UAE relationship in airports, training, investment in airlines, pilot employment. There are some seven areas to look into what kind of cooperation we can have," he said.
A second person with direct knowledge of the matter confirmed the formation of the committee.
The deal between Jet and Etihad was signed on 24 April, the same day the Indian government reached an air services agreement with the UAE that gave Abu Dhabi-based Etihad an additional 36,670 seats on weekly flights to and from India.
Some Indian politicians and airport and airline operators have objected to the Jet-Etihad agreement on the ground that it would undermine domestic interests.
"It's like four people playing poker with all the aces in Naresh Goyal's hands," said Mohan Ranganathan, aviation analyst and member of a government-appointed air safety group. "You already have Air India, which has objected to this deal; putting the CMD (chairman and managing director) of Air India to be part of this doctored committee is adding insult to injury."
Jet Airways declined to comment on the formation of the panel and Goyal's inclusion in it.
"I think this anxiety to get this deal through is shocking," said Janata Party leader Subramanian Swamy, who has questioned the deal. "If such a committee has been formed, then it is like putting the cart before the horse. There are many unresolved questions about the Jet-Etihad deal."
Swamy said he wrote a letter to Prime Minister Manmohan Singh on Thursday, likening the grant of bilateral flying rights to the allocation of natural resources such as coal and spectrum that have been at the centre of corruption allegations.
"Sky is a natural resource," Swamy said. "The question of allotting air space contradicts the constitutional bench opinion on natural resources. They can't hand it over to private parties like this. On this ground alone, the deal will get struck down."
Swamy pointed out in his letter to the Prime Minister, a copy of which was reviewed by Mint, that the Supreme Court had ruled that allocation of natural resources for commercial exploitation should be preferably through auction. In the case of the air services agreement with the UAE, India had allocated flying rights without any substantive reason, he wrote.
The Jet-Etihad deal is still awaiting regulatory approvals, including by the Foreign Investment Promotion Board (FIPB) and the Competition Commission of India.
Swamy said he would approach the courts immediately to challenge the deal if it wins clearance from FIPB.
Several other members of Parliament and activists have written to the Prime Minister seeking a scrapping of the agreement.
Consequently, the Prime Minister's Office (PMO) made public documents that showed that the request for such a steep increase in flying rights came from the civil aviation ministry.
The PMO was not satisfied with the way the cabinet note to clear the grant of additional flying rights had been prepared, a government official, who declined to be named, said on Thursday.
The note, this official said, had presented the facts as if the PMO had initiated the process for the flying rights to be cleared.
On 2 July, the PMO said it wanted to set the record straight and asked the aviation ministry to reword the cabinet note to reflect the right chronological order.
On 5 July, Mint reported on letters written to Sheikh Hamed bin Zayed Al Nahyan, managing director of Abu Dhabi Investment Authority and a member of the ruling family, by trade minister Anand Sharma and to UAE foreign minister Sheikh Abdullah bin Zayed Al Nahyan by external affairs minister Salman Khurshid in April, expressing a desire to engage with the UAE on discussions related to investments in the civil aviation sector. Indian ambassador to the UAE M.K. Lokesh, in a letter to the civil aviation ministry, also recommended greater engagement with the UAE.
These letters raised questions over whether India rushed through the controversial flying rights agreement with Abu Dhabi in an effort to placate the UAE, which had been upset over having to write off substantial investment in telecom in the country, Mint reported.
The UAE had to write off $1 billion of investment consequent to the cancellation of 2G telecom spectrum and licences in early 2012 after a Supreme Court ruling that the process was flawed.
Copyright 2013 - Mint, New Delhi
