Jet, Etihad in talks for possible alliance

Four days after the Union cabinet allowed 49 per cent foreign direct investment in aviation, a new strategic alliance seems to be on the cards. Jet Airways chairman Naresh Goyal and his top management are in Abu Dhabi for the past couple of days to negotiate with Etihad Airways, fuelling speculation of a possible alliance and investment in the airline.

Jet Airways and Etihad have a code share alliance since 2008.  In 2011, Etihad CEO James Hogan sought the Indian government’s permission to include more India-Abu Dhabi routes under the agreement. Etihad, which has been picking up stakes in airlines across the world, is enthusiastic about investing in India. Goyal, who was once  a staunch opponent of opening up of the sector to foreign airlines, has now changed stance and has welcomed the government decision.

Goyal holds 80 per cent in the Jet Airways through Tailwinds Limited, a foreign-registered company. On the sidelines of the company’s annual general meeting in Mumbai in August, Goyal said Jet Airways was an Indian company and he was a non-resident Indian, clarifying  the government’s norms on allowing FDI in aviation did not debar his airline from seeking a strategic partner. On equity dilution, he said, “So far, as it stands, we will be controlling. If the sentiment improves and the overall situation improves, I will have an open mind to dilute, but have control over the company.” He, however, clarified he wasn’t immediately seeking a foreign airline partner. “Today, I do not need (FDI). Tomorrow I may need. There is nothing permanent in business,” he had said.

Jet Airways spokesperson could not be reached for a comment. A senior executive from the airline declined comment. However, another official from the airline ruled out the FDI angle and said the talks with Etihad could pertain to  Jet’s international expansion, adding flights to Gulf and seeking to join Star Alliance comprising top airlines such as Lufthansa, Singapore Airlines amongst others.   Etihad did not give a specific comment for the story.

Etihad has also had discussions with Kingfisher and SpiceJet which are scouting for funds. "Etihad Airways welcomes the government's decision to allow foreign investment in Indian carriers. The Indian aviation industry offers tremendous potential, with significant passenger movement on domestic and international sectors.'' Etihad said in a statement.

Etihad Airways has identified equity investments in other airlines as an important evolution of its successful partnership strategy. Such investments will be made where Etihad Airways believes the commercial prospects are strong, where there are like-minded business philosophies, and where such commitment will be welcomed. If or when we do make further investments of this sort, we will announce them in line with regulatory and commercial requirements"