Aviation as an infrastructure segment.
Aviation sector does not only provide
About one-third of world trade (by
value) is delivered by air and about
half of international tourism is
facilitated by air links.
Civil aviation industry is an important
technological progress in a world of
1932: Mr. J.R.D.TATA flies a De Havilland Puss Moth
from Karachi to Bombay as part of the first Tata Sons
Ltd. flight to deliver mail carried by British Imperial
1948: Govt. of India acquires 49% stake in Tata
Airlines, designates it a flag carrier and renames it “Air
India International (AII)”.
1953: Tata Group sells majority stake in AII to the
Government of India, nationalizing air transport.
1953: Indian Airlines formed by merging 8 former
independent domestic airlines.
Total domestic passengers carried by the
scheduled domestic airlines between January
and April 2013 were 20.289 million, revealed
the official statistics.
No-frill carrier Indigo lead in terms of market
share with 29.8 per cent of the pie, followed by
Jet Airways-JetLite combine at 22.6 per
cent, Spice Jet 19.6 per cent, Air India
Domestic 19.2 and Go Air at 8.9 per cent for
the January-April 2013 period.
The air transport (including air freight) in India
has attracted foreign direct investment (FDI)
worth US$ 449.26 million from April 2000 to
KEY DEVELOPMENT &
Airways is in talks with Abu Dhabibased Etihad Airways.
Jet Airways offering visa procurement
The Rajiv Gandhi International Airport in
Hyderabad is set to commence „visa on
FDI IN AVIATION SECTOR
So far foreign investors in aviation sector were
allowed to invest up to 49% stake in domestic
airline companies but the criteria for the
investment was that the investor should not be
related to the aviation sector.
However, now with relaxed FDI norms, foreign
aviation companies are open for the investment in
domestic Indian aviation companies with up to
It will provide the much needed cash flow to the domestic
It will bring in investments in aviation technology.
It will improve the flight operation, ground handling, evolved
safety standards and overall better aviation experience.
Consumers will have wider choice.
International aviation companies will bring the best
WHY NOT ALLOW FORIEGN
AIRLNES TO FULLY OWN INDIAN
India does not have an open skies policy so it
signs liberal Air Services Agreement (ASA).
If FDI by foreign airlines is allowed upto
74% many global airlines will want to set up
subsidiary companies in India
Two investors-Ethiad of Abu dhabi and Air
Asia of Malaysia would rethink their entire
Incorporated on April 1, 1992.
Commenced operations on May 5, 1993.
Granted scheduled airline status on January 4, 1995.
12 April 2007 Jet Airways bought Air Sahara for $340
million later renamed JetLite.
Jetkonnect launched on May 8, 2009.
Total number of aircrafts 98.
March 2004: Began international operations with
inaugural flight from Chennai to Colombo.
Currently Operations: 50 Domestic destinations and 20
On April 24, 2013, announced a 24% stake sale to
Etihad at $379 million.
Set up by Royal (Amiri) Decree in July 2003.
Commercial operations in November 2003.
Etihad has a fleet of 66 aircraft serving 87
destinations in 55 countries.
Chairman - HH Sheikh Hamed bin Zayed Al
Chief Operating Officer and President - James
PRODUCTS & SERVICES
Strategic alliance with Etihad Airways of the
United Arab Emirates.
The injection of US$750 million covering up to
24% of Jet Airways‟ Share Capital & other parts
through bonds & equity.
Expansion of existing operations and introduction
of new routes between India and Abu Dhabi.
Conviniene to customers.
WHAT LED TO THE
INDIA – UAE Bilateral Agreement
Agreement Validity – 3 yrs.
Indian population in the Gulf region Saudi
Arabia, UAE and their neighbors. 51.97% of Gulf
populations is Indian.
More seats allocation to the Indians in India-Gulf
Lower Fares and Special Offers to Frequent Flyers.
Allow designated airlines of each side to have the
BENEFITS TO BE
The deal is life saver for Jet, with a huge
debt of Rs.13,282 crore in the fiscal ended
March, 2012. It will not only get USD 750
million but will have access to cheap loans
@3% from Abu Dhabi
To push the deal through, the Indian Govt.
agreed (by way of bilateral agreement with
UAE) to give Etihad permission to fly to
11 more cities in India in addition to 9 it
Jet‟s consolidated Net Debt-Equity=97
times. The equity infusion will allow Jet to
pay down the debt & will lead t its DebtEquity falling to 4.3 times. It will result in
int. Saving of Rs.190-200 crore per year.
Etihad may cannibalise the traffic share of
Indian airlines by flying passengers to
various parts of the world through its hub
airport in Abu Dhabi.
Key cost benefits and synergies in fleet
acquisitions, maintenance, joint purchasing
opportunities for fuel, spare parts and
insurance and technology support will
come through. Other areas of cooperation
Much needed entrance in Indian market
with the potential market and steady
growth. Also the number of seats to be
increase three times between India &
MAJOR CONCERN OF SEBI
Consent of 3/4th of members majority for
The agreement has unilateral right and can be
terminated by Etihad any time.
The jet airways headquarters will be shifted to
Tax Evasive Measure.
IMPACT ON ECONOMY,STOCK
MARKET & VARIOUS OTHER
Indians working in U.A.E
Lead to the growth of Aviation Sector.
Generation of employment.
Will push the stock of all the airlines upward.
It would ease the pressure of high current account
deficit in long run.
April 24 Jet and Etihad sign strategic alliance. The latter agrees to buy a 24% stake in the former
for about Rs 2,060 crore
May 24 Jet shareholders approve stake sale. The airline defers resolution to amend the company‟s
articles of association
May 27 The two airlines amend shareholder agreement to address shareholder and Sebi concerns
on „control‟ and „ownership‟
May 29 & 31 Subramanian Swamy and Jaswant Singh write to the PM against the deal
June 13 PMO writes to the civil aviation ministry to redraft the Cabinet note on Abu Dhabi traffic
June 14 Foreign Investment Promotion Board defers approval to Jet-Etihad alliance
July 2 PMO defends the Abu Dhabi bilaterals and says there‟s no division within the government
on the issue
BoD Composition: 2 Directors for Etihad with Jets 5 and 7
Independent Directors of Indian origin.
Audit Committee member reduced to 1 for Etihad.
Board Decisions to be taken on 2/3rd majority rather than 3/4th as
No change in the Shareholding pattern. Etihad acquire 24% stake
leaving 51% with Goyal and remaining 25% with
others, including institutions and individuals.
Goyal will be designated as the First Chairman of the airline after
Etihad's investment is approved by the Indian Authorities.
Etihad has agreed not to act in concert with Naresh Goyal, while