The India-Abu Dhabi bilateral air services agreement, which ran into controversy following the Jet-Etihad deal, was approved by the government on Tuesday enabling their airlines to fly 50,000 seats each week, up from the current level of 13,700.
The agreement received post-facto approval of the Union Cabinet at a meeting chaired by Prime Minister Manmohan Singh in New Delhi on Tuesday evening. The accord would allow the designated carriers of India and Abu Dhabi to have 50,000 seat-capacity each week. This increase of 36,670 seats would be carried out in a phased manner spread over a three-year period.
While an additional 11,000 seats per week would be added to the existing 13,700 this year, another 12,800 seats per week would be added in 2014 and 12,870 more in 2015.
A major controversy had arisen with several MPs and political leaders objecting to this massive enhancement in bilateral air traffic rights which had followed the signing of the Rs 2,058 crore deal between Jet Airways and Abu Dhabi carrier Etihad, under which the latter would pick up 24 per cent equity stake in Jet.
Leaders including Jaswant Singh, Nishikant Dubey (both BJP), Dinesh Trivedi (TMC), Gurudas Dasgupta (CPI) and then Janata Party chief Subramanian Swamy (now in BJP), had shot off letters to Prime Minister Manmohan Singh objecting to the deal, claiming the government was favouring the private Indian carrier at the cost of others.
Some of them had also alleged that the Jet-Etihad deal, which is yet to get the official nod, would go against the interests of the Indian aviation sector.
The MPs had questioned the rationale behind the decision regarding massive enhancement in the number of seats that airlines from India and Abu Dhabi would be allowed to operate.
Following the objections, the Prime Minister had asked the Civil Aviation Ministry on June 13 to revise the Cabinet note on the matter by making modifications to address the concerns flagged by these politicians. The Ministry was also asked to detail the sequence of events leading India and Abu Dhabi to sign the new air services agreement in April, after a gap of several years.
The Prime Minister's Office (PMO) had also issued a statement rebutting the charge that the new bilateral agreement was to give a boost to the Jet-Etihad deal. On June 29, the Jet-Etihad deal got the approval of the Foreign Investment Promotion Board (FIPB) with riders to maintain effective Indian control over Jet.
A bilateral air services agreement between two countries allows their designated airlines to operate and later increase or decrease the number of flights operating between them, the number of seats to be flown per week and even the aircraft type. The bilateral air services accord also includes the fact that Abu Dhabi would allow the gauge change facility for Indian carriers. Change of gauge in air transport means a change of aircraft, even to a larger one.
It implies that an Indian airline can take passengers to Abu Dhabi, change aircraft and fly them to other international destinations from there. According to official figures, in the next seven years Indians flying abroad would double to 80 million.