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TIE UP BETWEEN JETETIHAD AIRWAYS
THE PRESENTERS: Bhavneet (47)
 Sujatha (48)
 Rajat Omar (49)
 Mohit Banka (50)
 Garima Bansal (51)
 Nitish Bhardwaj (52)
 Prashant (52)
 Vinay Singhla (54)

MOHIT
AVIATION
INTRODUCTION
Aviation as an infrastructure segment.
 Aviation sector does not only provide
air transport.
 About one-third of world trade (by
value) is delivered by air and about
half of international tourism is
facilitated by air links.
 Civil aviation industry is an important
engine
for
innovation
and
technological progress in a world of

INDIAN AVIATION
INDUSTRY








1932: Mr. J.R.D.TATA flies a De Havilland Puss Moth
from Karachi to Bombay as part of the first Tata Sons
Ltd. flight to deliver mail carried by British Imperial
Airways.
1948: Govt. of India acquires 49% stake in Tata
Airlines, designates it a flag carrier and renames it “Air
India International (AII)”.
1953: Tata Group sells majority stake in AII to the
Government of India, nationalizing air transport.
1953: Indian Airlines formed by merging 8 former
independent domestic airlines.
MARKET SIZE






Total domestic passengers carried by the
scheduled domestic airlines between January
and April 2013 were 20.289 million, revealed
the official statistics.
No-frill carrier Indigo lead in terms of market
share with 29.8 per cent of the pie, followed by
Jet Airways-JetLite combine at 22.6 per
cent, Spice Jet 19.6 per cent, Air India
Domestic 19.2 and Go Air at 8.9 per cent for
the January-April 2013 period.
The air transport (including air freight) in India
has attracted foreign direct investment (FDI)
worth US$ 449.26 million from April 2000 to
DOMESTIC AIRLINES











Air India
GoAir Airlines
IndiGo Airlines
Jet Airways
Jet Airways Konnect
SpiceJet Airlines
JetLite (Air Sahara)
MDLR [Murli Dhar Lakh Ram (MDLR) Group]
Airlines*
Jagson Airline*
Paramount Airways*

*Small Privately Owned Airline(s)
NAMRATA
KEY DEVELOPMENT &
INVESTMENT
 Jet

Airways is in talks with Abu Dhabibased Etihad Airways.
 Jet Airways offering visa procurement
services.
 The Rajiv Gandhi International Airport in
Hyderabad is set to commence „visa on
arrival‟ facility.
FDI IN AVIATION SECTOR
So far foreign investors in aviation sector were
allowed to invest up to 49% stake in domestic
airline companies but the criteria for the
investment was that the investor should not be
related to the aviation sector.
 However, now with relaxed FDI norms, foreign
aviation companies are open for the investment in
domestic Indian aviation companies with up to
49% stake

BENEFITS


It will provide the much needed cash flow to the domestic
aviation companies.



It will bring in investments in aviation technology.



It will improve the flight operation, ground handling, evolved
safety standards and overall better aviation experience.



Consumers will have wider choice.



International aviation companies will bring the best
WHY NOT ALLOW FORIEGN
AIRLNES TO FULLY OWN INDIAN
CARRIERS?
India does not have an open skies policy so it
signs liberal Air Services Agreement (ASA).
 If FDI by foreign airlines is allowed upto
74% many global airlines will want to set up
subsidiary companies in India
 Two investors-Ethiad of Abu dhabi and Air
Asia of Malaysia would rethink their entire
Indian stratergy.

BHAVNEET
INTRODUCTION TO JET
AIRWAYS
JET AIRWAYS










Incorporated on April 1, 1992.
Commenced operations on May 5, 1993.
Granted scheduled airline status on January 4, 1995.
12 April 2007 Jet Airways bought Air Sahara for $340
million later renamed JetLite.
Jetkonnect launched on May 8, 2009.
Total number of aircrafts 98.
March 2004: Began international operations with
inaugural flight from Chennai to Colombo.
Currently Operations: 50 Domestic destinations and 20
International destinations.
On April 24, 2013, announced a 24% stake sale to
Etihad at $379 million.
CHAIRMAN’S PROFILE



MR.NARESH GOYAL
MARKET SHARE
SUJATA
ETIHAD AIRWAYS
SNAPSHOT
ETIHAD AIRWAYS
Set up by Royal (Amiri) Decree in July 2003.
 Commercial operations in November 2003.
 Etihad has a fleet of 66 aircraft serving 87
destinations in 55 countries.
 Chairman - HH Sheikh Hamed bin Zayed Al
Nahyan
 Chief Operating Officer and President - James
Hogan

CHAIRMAN
HH Sheikh Hamed bin Zayed Al Nahyan
NETWORK MAP
RAJAT
ETIHAD AIRWAYS

JET AIRWAYS

JET
MALL

ON
GROUN
D
SERVIC
E

JET
SPARK

CARGO

IN
FLIGHT
EXPERI
ENCE

CARGO
SERVIC
ES
JET
AIRWAS
KONNE
CT

JET
KIDS
JET
ESCAPE
S

JET
MOBIL
E

DIAMO
ND
FIRST
CLASS

ETIHAD
GUEST

ETIHAD
EXPRES
S
COACH
SERVIC
ES

PEARL
BUSINE
SS
CLASS
CORAL
ECONO
MY
CLASS

SERVIC
ES

ETIHAD
CHEUF
FUER
SERVIC
ESS

IN
FLIGHT
ENTERT
AINME
NT
DUTY
FREE

PRODUCTS & SERVICES
ETIHAD AIRWAYS

JET AIRWAYS
UNITE
D
AIRLIN
ES

AMERI
CAN
AIRLIN
E

SAFI
AIRWA
YS

ETIHA
D

ALITA
LIA

QANT
AS

AIR
FRANC
E
CODES
HARE

JET
KONN
ECT

AIR
CANA
DA

ALL
NIPPO
N

AIR
ASTAN
A

BRUSE
LLS
AIRLI
NE

CODES
HARE

THALY
S

AIRBE
RLIN

EMIRA
TESSO
UTH
AFRIC
AN
AIRLIN
E

AIR
LINGU
S

ALITA
LIA

AIR
SEYCH
ELLES

ANA
AIR
MALT
A

CODESHARE PARTNERS
JET AND ETIHAD
AIRWAYS
JET AIRWAYS-ETIHAD
STRATEGIC ALLIANCE
Strategic alliance with Etihad Airways of the
United Arab Emirates.
 The injection of US$750 million covering up to
24% of Jet Airways‟ Share Capital & other parts
through bonds & equity.
 Expansion of existing operations and introduction
of new routes between India and Abu Dhabi.
 Conviniene to customers.

VINAY
WHAT LED TO THE
DEAL?

INDIA – UAE Bilateral Agreement
(Aviation)

Agreement Validity – 3 yrs.
 Indian population in the Gulf region Saudi
Arabia, UAE and their neighbors. 51.97% of Gulf
populations is Indian.
 More seats allocation to the Indians in India-Gulf
Route.
 Lower Fares and Special Offers to Frequent Flyers.
 Allow designated airlines of each side to have the

BENEFITS TO BE
DERIVED
Jet Airways

Etihad

The deal is life saver for Jet, with a huge
debt of Rs.13,282 crore in the fiscal ended
March, 2012. It will not only get USD 750
million but will have access to cheap loans
@3% from Abu Dhabi

To push the deal through, the Indian Govt.
agreed (by way of bilateral agreement with
UAE) to give Etihad permission to fly to
11 more cities in India in addition to 9 it
already lands.

Jet‟s consolidated Net Debt-Equity=97
times. The equity infusion will allow Jet to
pay down the debt & will lead t its DebtEquity falling to 4.3 times. It will result in
int. Saving of Rs.190-200 crore per year.

Etihad may cannibalise the traffic share of
Indian airlines by flying passengers to
various parts of the world through its hub
airport in Abu Dhabi.

Key cost benefits and synergies in fleet
acquisitions, maintenance, joint purchasing
opportunities for fuel, spare parts and
insurance and technology support will
come through. Other areas of cooperation

Much needed entrance in Indian market
with the potential market and steady
growth. Also the number of seats to be
increase three times between India &
UAE.
NITISH
SYNERGIES TO BE
DERIVED
FACTS & FIGURES
MAJOR CONCERN OF SEBI
& FIPB


Consent of 3/4th of members majority for

decision.


The agreement has unilateral right and can be

terminated by Etihad any time.


The jet airways headquarters will be shifted to

Abu Dhabi.


Tax Evasive Measure.
PRASHANT
IMPACT ON ECONOMY,STOCK
MARKET & VARIOUS OTHER
AREAS


Indians working in U.A.E



Lead to the growth of Aviation Sector.



Generation of employment.



Will push the stock of all the airlines upward.



It would ease the pressure of high current account

deficit in long run.
TAKE-OFF TROUBLES


April 24 Jet and Etihad sign strategic alliance. The latter agrees to buy a 24% stake in the former
for about Rs 2,060 crore



May 24 Jet shareholders approve stake sale. The airline defers resolution to amend the company‟s
articles of association



May 27 The two airlines amend shareholder agreement to address shareholder and Sebi concerns
on „control‟ and „ownership‟



May 29 & 31 Subramanian Swamy and Jaswant Singh write to the PM against the deal



June 13 PMO writes to the civil aviation ministry to redraft the Cabinet note on Abu Dhabi traffic
rights



June 14 Foreign Investment Promotion Board defers approval to Jet-Etihad alliance



July 2 PMO defends the Abu Dhabi bilaterals and says there‟s no division within the government
on the issue
SOLUTIONS











BoD Composition: 2 Directors for Etihad with Jets 5 and 7
Independent Directors of Indian origin.
Audit Committee member reduced to 1 for Etihad.
Board Decisions to be taken on 2/3rd majority rather than 3/4th as
first drafted.
No change in the Shareholding pattern. Etihad acquire 24% stake
leaving 51% with Goyal and remaining 25% with
others, including institutions and individuals.
Goyal will be designated as the First Chairman of the airline after
Etihad's investment is approved by the Indian Authorities.
Etihad has agreed not to act in concert with Naresh Goyal, while
taking decisions.
Thank You….!

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Tie up between jet & etihad airways

  • 1. TIE UP BETWEEN JETETIHAD AIRWAYS
  • 2. THE PRESENTERS: Bhavneet (47)  Sujatha (48)  Rajat Omar (49)  Mohit Banka (50)  Garima Bansal (51)  Nitish Bhardwaj (52)  Prashant (52)  Vinay Singhla (54) 
  • 4. AVIATION INTRODUCTION Aviation as an infrastructure segment.  Aviation sector does not only provide air transport.  About one-third of world trade (by value) is delivered by air and about half of international tourism is facilitated by air links.  Civil aviation industry is an important engine for innovation and technological progress in a world of 
  • 5. INDIAN AVIATION INDUSTRY     1932: Mr. J.R.D.TATA flies a De Havilland Puss Moth from Karachi to Bombay as part of the first Tata Sons Ltd. flight to deliver mail carried by British Imperial Airways. 1948: Govt. of India acquires 49% stake in Tata Airlines, designates it a flag carrier and renames it “Air India International (AII)”. 1953: Tata Group sells majority stake in AII to the Government of India, nationalizing air transport. 1953: Indian Airlines formed by merging 8 former independent domestic airlines.
  • 6. MARKET SIZE    Total domestic passengers carried by the scheduled domestic airlines between January and April 2013 were 20.289 million, revealed the official statistics. No-frill carrier Indigo lead in terms of market share with 29.8 per cent of the pie, followed by Jet Airways-JetLite combine at 22.6 per cent, Spice Jet 19.6 per cent, Air India Domestic 19.2 and Go Air at 8.9 per cent for the January-April 2013 period. The air transport (including air freight) in India has attracted foreign direct investment (FDI) worth US$ 449.26 million from April 2000 to
  • 7. DOMESTIC AIRLINES           Air India GoAir Airlines IndiGo Airlines Jet Airways Jet Airways Konnect SpiceJet Airlines JetLite (Air Sahara) MDLR [Murli Dhar Lakh Ram (MDLR) Group] Airlines* Jagson Airline* Paramount Airways* *Small Privately Owned Airline(s)
  • 9. KEY DEVELOPMENT & INVESTMENT  Jet Airways is in talks with Abu Dhabibased Etihad Airways.  Jet Airways offering visa procurement services.  The Rajiv Gandhi International Airport in Hyderabad is set to commence „visa on arrival‟ facility.
  • 10. FDI IN AVIATION SECTOR So far foreign investors in aviation sector were allowed to invest up to 49% stake in domestic airline companies but the criteria for the investment was that the investor should not be related to the aviation sector.  However, now with relaxed FDI norms, foreign aviation companies are open for the investment in domestic Indian aviation companies with up to 49% stake 
  • 11. BENEFITS  It will provide the much needed cash flow to the domestic aviation companies.  It will bring in investments in aviation technology.  It will improve the flight operation, ground handling, evolved safety standards and overall better aviation experience.  Consumers will have wider choice.  International aviation companies will bring the best
  • 12. WHY NOT ALLOW FORIEGN AIRLNES TO FULLY OWN INDIAN CARRIERS? India does not have an open skies policy so it signs liberal Air Services Agreement (ASA).  If FDI by foreign airlines is allowed upto 74% many global airlines will want to set up subsidiary companies in India  Two investors-Ethiad of Abu dhabi and Air Asia of Malaysia would rethink their entire Indian stratergy. 
  • 15. JET AIRWAYS          Incorporated on April 1, 1992. Commenced operations on May 5, 1993. Granted scheduled airline status on January 4, 1995. 12 April 2007 Jet Airways bought Air Sahara for $340 million later renamed JetLite. Jetkonnect launched on May 8, 2009. Total number of aircrafts 98. March 2004: Began international operations with inaugural flight from Chennai to Colombo. Currently Operations: 50 Domestic destinations and 20 International destinations. On April 24, 2013, announced a 24% stake sale to Etihad at $379 million.
  • 21. ETIHAD AIRWAYS Set up by Royal (Amiri) Decree in July 2003.  Commercial operations in November 2003.  Etihad has a fleet of 66 aircraft serving 87 destinations in 55 countries.  Chairman - HH Sheikh Hamed bin Zayed Al Nahyan  Chief Operating Officer and President - James Hogan 
  • 22. CHAIRMAN HH Sheikh Hamed bin Zayed Al Nahyan
  • 24. RAJAT
  • 28. JET AIRWAYS-ETIHAD STRATEGIC ALLIANCE Strategic alliance with Etihad Airways of the United Arab Emirates.  The injection of US$750 million covering up to 24% of Jet Airways‟ Share Capital & other parts through bonds & equity.  Expansion of existing operations and introduction of new routes between India and Abu Dhabi.  Conviniene to customers. 
  • 29. VINAY
  • 30. WHAT LED TO THE DEAL? INDIA – UAE Bilateral Agreement (Aviation) Agreement Validity – 3 yrs.  Indian population in the Gulf region Saudi Arabia, UAE and their neighbors. 51.97% of Gulf populations is Indian.  More seats allocation to the Indians in India-Gulf Route.  Lower Fares and Special Offers to Frequent Flyers.  Allow designated airlines of each side to have the 
  • 31. BENEFITS TO BE DERIVED Jet Airways Etihad The deal is life saver for Jet, with a huge debt of Rs.13,282 crore in the fiscal ended March, 2012. It will not only get USD 750 million but will have access to cheap loans @3% from Abu Dhabi To push the deal through, the Indian Govt. agreed (by way of bilateral agreement with UAE) to give Etihad permission to fly to 11 more cities in India in addition to 9 it already lands. Jet‟s consolidated Net Debt-Equity=97 times. The equity infusion will allow Jet to pay down the debt & will lead t its DebtEquity falling to 4.3 times. It will result in int. Saving of Rs.190-200 crore per year. Etihad may cannibalise the traffic share of Indian airlines by flying passengers to various parts of the world through its hub airport in Abu Dhabi. Key cost benefits and synergies in fleet acquisitions, maintenance, joint purchasing opportunities for fuel, spare parts and insurance and technology support will come through. Other areas of cooperation Much needed entrance in Indian market with the potential market and steady growth. Also the number of seats to be increase three times between India & UAE.
  • 35. MAJOR CONCERN OF SEBI & FIPB  Consent of 3/4th of members majority for decision.  The agreement has unilateral right and can be terminated by Etihad any time.  The jet airways headquarters will be shifted to Abu Dhabi.  Tax Evasive Measure.
  • 37. IMPACT ON ECONOMY,STOCK MARKET & VARIOUS OTHER AREAS  Indians working in U.A.E  Lead to the growth of Aviation Sector.  Generation of employment.  Will push the stock of all the airlines upward.  It would ease the pressure of high current account deficit in long run.
  • 38. TAKE-OFF TROUBLES  April 24 Jet and Etihad sign strategic alliance. The latter agrees to buy a 24% stake in the former for about Rs 2,060 crore  May 24 Jet shareholders approve stake sale. The airline defers resolution to amend the company‟s articles of association  May 27 The two airlines amend shareholder agreement to address shareholder and Sebi concerns on „control‟ and „ownership‟  May 29 & 31 Subramanian Swamy and Jaswant Singh write to the PM against the deal  June 13 PMO writes to the civil aviation ministry to redraft the Cabinet note on Abu Dhabi traffic rights  June 14 Foreign Investment Promotion Board defers approval to Jet-Etihad alliance  July 2 PMO defends the Abu Dhabi bilaterals and says there‟s no division within the government on the issue
  • 39. SOLUTIONS       BoD Composition: 2 Directors for Etihad with Jets 5 and 7 Independent Directors of Indian origin. Audit Committee member reduced to 1 for Etihad. Board Decisions to be taken on 2/3rd majority rather than 3/4th as first drafted. No change in the Shareholding pattern. Etihad acquire 24% stake leaving 51% with Goyal and remaining 25% with others, including institutions and individuals. Goyal will be designated as the First Chairman of the airline after Etihad's investment is approved by the Indian Authorities. Etihad has agreed not to act in concert with Naresh Goyal, while taking decisions.