Etihad-Jet to infuse new life in Indian aviation sector

The Etihad-Jet Airways deal will help infuse new lease of life to the troubled Indian aviation sector which has been navigating headwinds from the economic slowdown that resulted in a drop in passenger traffic and increase in operational costs, an apex industry body said.

Induction of capital by Etihad, one of the most efficient airlines of the world will not only improve the financial position of Jet Airways but also bring several operational benefits, as well as give an extended reach to the Indian carrier, said the Associated Chambers of Commerce and Industry of India.

Etihad is currently in negotiations with Jet to acquire its 24 per cent stake amid Indias relaxed Foreign Direct Investment policy that allows foreign airline companies to take up to 49 per cent in the local airline firms.

Etihad is expected to increase its stake in Jet to 49 per cent over several years and has, in the last two years, picked up strategic stakes in several global carriers like Virgin Australia, Air Seychelles and Aer Lingus.

In a way, Jet would become part of the big Etihad reach all around the world.

The Etihad-Jet deal would also send positive signals among global investors who wish to invest in different sectors of the economy, it said in a statement.

However, a lot more needs to be done from both the industry, as well as, the policy perspective and clarity to bring back the vibrancy to the sector, which had made a very good start, but was caught in the air-pockets mid-way.

Among others, the apex body urged the government to ensure that all the mandatory clearances from the Foreign Investment Promotion Board and even from the Reserve Bank of India should be given expeditiously so that a refurbished entity takes off with a renewed vigour.

It said ,after the Etihad-Jet deal, fresh efforts should also be made to revive the grounded Kingfisher Airlines.