Will Jet and Etihad Shake Hands by December End?

Jet Airways of India, the strongest Indian full service carrier having presence in the Indian domestic and international markets, is all set to strike the deal with the Etihad Airlines of Abu Dhabi for selling the stake of 24 percent. The deal, valued at Rs 1600 crores, would be the first to have gone through by the stake sale to the foreign airline after the government allowed the sale of stake in domestic airlines up to 49 percent. The deal will be mutually beneficial for both the airlines, though it is the Etihad will is expected to be a bigger gainer since it will have the entry to the fast growing Indian aviation market.

As per the deal which is in the realm of speculations right now, the Jet will be required to shift its base of global operations from Brussels to Abu Dhabi and will also have access to cheap fuel in this emirate. With fuel making considerable proportion of the airplane operating costs, Jet will be able to save good sums annually in its international operations, helping it provide cheap air tickets to customers or plough in the savings to expand its reach in the lucrative international market segments. Jet and Etihad will be operating the flights under the code share agreement.

However, Jet will have to go through the process of seeking the approvals from the Indian government, especially the Foreign Investment Promotion Board (FIPB). It will also have to ensure that the majority of board members are Indians, the CEO is an Indian and that the joint venture company is registered in India. The agreement is likely to be signed between the two airlines keeping these considerations in mind.

Whatever the final outcome may be, if the deal does goes through, then it will be customers who will benefit by doing the flight booking as there will be more destinations to choose from and the expectedly lower costs of operations.

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