Shares of three aviation firms rose by 1.17% to 14.24% at 14:06 IST on BSE as the latest deal between Jet Airways (India) and UAE-based Etihad Airways is seen as a positive step for the aviation industry.
SpiceJet (up 14.24%), Jet Airways (India) (up 11%) and Kingfisher Airlines (up 1.17%), edged higher.
The BSE Sensex was up 162.71 points, or 0.85% at 19,342.07.
As the Jet Airways-Etihad Airways deal marked the first step of foreign direct investment (FDI) in aviation after the country relaxed ownership rules in 2012, there seems to be a ray of hope for the sector. The deal may also set a benchmark of sorts for other aviation firms that are likely to tie-up with foreign air carriers.
Jet Airways (India) and United Arab Emirates (UAE)-based Etihad Airways on Wednesday, 24 April 2013, announced that Etihad Airways has agreed to subscribe to 2.72 crore new shares of Jet Airways at a price of Rs 754.74 per share. The value of this equity investment is $379 million and will result in Etihad Airways holding 24% of the enlarged share capital of Jet Airways. Etihad Airways' wider overall commitment to Jet Airways includes the injection of $220 million to create and strengthen a wide-ranging partnership between the two carriers. As part of this, Etihad Airways paid $70 million to purchase Jet Airways' three pairs of Heathrow slots through the sale and lease back agreement announced on 27 February 2013. Jet Airways continues to operate flights to London utilising these slots.
An amount of $150 million will be invested by Etihad Airways by way of a majority equity investment in Jet Airways' frequent flyer program "Jet Privilege", subject to appropriate regulatory and corporate approvals and final commercial agreements which are expected to be completed within the next six months.
Under the strategic partnership, which will be subject to full regulatory and shareholder approval, the airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi, providing an ever wider choice to the travelling public. They will combine their network of 140 destinations, with Jet Airways establishing a Gulf gateway in Abu Dhabi and expanding its reach through Etihad Airways' growing global network.
Passengers from 23 cities in India will benefit from direct connections to international destinations. New flights from Jet Airways' home hubs and metro airports will further strengthen its current operations from these airports. Jet Airways' vision continues to be to develop Delhi and Mumbai airports as its primary home hubs and connecting them to Asian, European and other regions.
A key component of the wide-ranging partnership is expanded codesharing on flights with passengers benefiting from reciprocal 'earn-and-burn' rights on the airlines' frequent flyer programs. The proposed codeshare expansion will significantly enable Etihad Airways to tap into India's rapidly growing travel market, providing additional passenger traffic to Etihad Airways' Middle Eastern, North American and European destinations, and give Jet Airways passengers from various cities access to an expanded network.
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