PMO rebuffed, Prime Minister grounded
That the Union Ministry of Civil Aviation should have successfully pushed through the Jet-Etihad deal in the face of serious concerns which the Prime Minister's Office raised over the agreement, speaks poorly of Prime Minister Manmohan Singh's hold on the Government. Two inferences can be drawn from the situation. The first is that the PMO, after having expressed reservations, was persuaded to tone down the criticism and allow the deal to go through.
The second is that the Prime Minister's concerns did not matter much for the Civil Aviation Ministry which was determined to have the agreement. It is evident that Mr Singh was swamped by proponents of the deal who believed that the pact would enhance the country's civil aviation sector, give it some foothold in the international markets and serve as a foreign diplomacy success. These believers in the agreement apparently had their way and the Congress-led UPA Government went ahead with the deal despite the warnings.
Whatever, the PMO note has raised a fresh round of controversy over the deal, and the issues it has flagged are precisely the same that critics of the agreement have been underlining for long. Some of those concerns form part of a petition that Bharatiya Janata Party leader Subramanian Swamy has filed in the Supreme Court. They broadly relate to the adverse impact the agreement would have on Air India in general and on long haul traffic out of the country and seat-sharing with the Abu Dhabi-based Etihad in particular. The PMO's explosive note — which largely underlines the “negative” impact that the agreement will have on the country's prospects in civil aviation — has surfaced as a result of a query under the Right to Information Act, and it is certain to change the narrative on the subject, in and outside the court.
The note, titled “Impact of Middle Eastern Carriers growth on Indian Aviation”, was prepared by the PMO a few weeks before the Cabinet Committee on Economic Affairs approved the deal. It lists seven objections and makes it amply clear that the deal, which offers Etihad a generous bounty of 35,000 seats from India every week, will sound the death-knell for Air India. This is not surprising, given that already it is not any Indian airline but the UAE's Emirates which flies the largest number of Indian international passengers. Also, the deal envisions the use of Jet Airways as a feeder network to re-direct Indian traffic to Abu Dhabi.
This will effectively isolate the country as a travel destination from the rest of the world. With air traffic being routed through Abu Dhabi, there will be fewer direct, long-distance flights in and out of India. Direct access to the Americas, Europe and Africa will be severely limited, and this is sure to discourage domestic traffic. The deal will also have an adverse impact on India's plans to develop transport hubs within the country. India will lose also the revenue that it could have made, for instance, in catering, cargo and fuelling charges. Moreover, if the transport hub plans don't materialise, then Indian travellers will have to bear the cost of investments already made in this regard. Tourism will also suffer, both in terms of in-bound and out-bound traffic. Clearly, the Union Government and the Prime Minister have a lot of explaining to do.