New Delhi, July 2
Civil Aviation Minister Ajit Singh today defended the Rs 2,058 crore Jet-Etihad deal and called the controversy surrounding it “long on politics and short on facts”.

Wary of generating yet another controversy in the run-up to the general election, the Prime Minister’s Office (PMO) stepped in to clear the air and denied any “rift” between the ministers and Prime Minister Manmohan Singh on the subject.

The PMO in a statement said matters raised by various MPs and others in their letters to the PMO were being examined by respective departments. These include issues concerning air services agreement, equity stake sale and security concerns.

The contentious Bilateral Air Services Agreement has been kept in abeyance till responses on letters with complaints on the agreement and security concerns are received.

The PMO blamed the media for “factually incorrect and baseless” reports and said the Bilateral Air Services Agreement and the Private Equity Stake proposal were two different matters.

“The Prime Minister is neither washing his hands of the Bilateral Air Services Agreement nor is the PMO trying to do a U-turn on the issue now,” the statement said.

It is unlikely that the Jet-Etihad deal will now be cleared by the Foreign Investment Promotion Board (FIPB) or any other department in a hurry.

Sources say the FIPB had last month decided to put the deal on hold and sought clarification from Jet Airways on “effective control” and “ownership” before clearing its 24 per cent stake sale deal with Etihad following serious security and other related concerns.

The government does not want the issue to snowball into yet another controversy for the PMO. The highest office had given its consent to dramatically increase the number of bilateral weekly seats between Abu Dhabi and Delhi from 13,330 to 36,370 just before the deal.

In its clarification on “two distinctly different matters being reported by the media”, the PMO statement said: “The first is the enhancement of seat

entitlements under a Bilateral Air Services Agreement between India-Abu Dhabi. This is an inter-government agreement on bilateral air traffic seat entitlements and concerns the governments of the two countries.

“The second is an equity stake proposal between Jet Airways and Etihad, which is a private agreement between two private entities. Such agreements, as they involve foreign direct investment, have to be in accordance with the laws of the land and any government policies in place in this regard. Being distinct issues and between different categories of entities, the two matters need to be handled separately without mixing them up.”

But the direct co-relationship between the two issues becomes clear by a report that CPM leader Sitaram Yechury-headed Parliamentary Standing Committee submitted to Parliament in May.

“The committee is aware that bilateral negotiations between two countries for increasing the airline seats take place only when the existing allotments become insufficient. The committee understands that domestic airlines concerned have not exhausted those allocated seats. Prima facie, this move appears to facilitate one airline to strike a deal with a foreign airline for its stake sale at a huge premium.

“The committee feels the huge premium could be a backhanded way of obtaining access to the huge civil aviation market in India,” the report said and raised concerns about the ill-effects of the deal on Indian airports and airlines, particularly national carrier Air India.

Ajit Singh said it was an “important deal”, in fact the “first big deal in the Civil Aviation Ministry. In terms of the FDI, it is bigger than any other deal this year. There are so many dimensions to it. Those opposing the deal are long on politics and short on facts,” he said.