February 10, 2006, The Hindu Business Line
New Delhi
Our Bureau
The NGO has called for imposing conditions similar to what had been imposed by the European Commission while approving the alliance of British Airways and American Airlines; The Commission had mandated that the alliance give up some of their slots to competitors.
CUTS International has urged the Directorate-General of Civil Aviation (DGCA) to redistribute Air Sahara’s rights to all airlines to prevent Jet Airways from attaining a dominant position in slots, as this would restrain growth of competition.
“Air Sahara’s aviation rights should not automatically accrue to Jet Airways and they should be required to re-apply for securing additional rights. The DGCA should re-distribute Air Sahara’s rights to all airlines. Had Air Sahara continued and given the inevitability of its closure, its rights would have got released for distribution to others, and not to Jet Airways alone,” the Non Governmental Organisation (NGO) has said in a statement.
In a representation to the DGCA, Cuts International has called for imposing conditions similar to what had been imposed by the European Commission while approving the alliance of British Airways and American Airlines. The European Commission had mandated that the alliance give up some of their slots to competitors. The NGO has also raised concerns that Jet Airways may be able to exert considerable market pressure to the detriment of consumer welfare if all the parking bays and landing slots, domestic and international flying routes, technical staff and other ground handling facilities of Air Sahara were provided to it.
On January 19, Jet Airways inked an agreement to purchase Air Sahara for a consideration of $500 million. The agreement would see Jet Airways acquire 27.6 crore equity shares (with a face value of Rs 10), five crore preferential shares and the Group loans.
The agreement is to see the entire aviation business of Air Sahara including some of aircraft leases, real estate like the lounges and assets such as auxiliary power units and engines, being taken up by Jet Airways.
However, some other investments with Air Sahara including helicopters, the personal BBJ, some advances and the contract with the Board of Control for Cricket in India are to be carved out and sold back before the transaction happens.
The buy-out, however, has to be cleared by the authorities before it becomes effective.
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