Jet, Etihad Partnership Faces Legal Hurdle Anew

Thursday, 19th June 2014 at 04:41am

The fresh legal impediment was raised by the Competition Commission of Singapore (CCS), an agency under the Ministry of Trade and Industry of Singapore, tasked to scrutinize anti-competitive activities by companies or individuals operating in the country. Both airlines operate flights between Singapore and their respective home countries.

To recall, Etihad Airways and Jet Airways struck a deal over a year ago with the former purchasing a 24% stake in the latter. The deal, worth US$750 million, was sealed in the latter part of last year between the two airlines.

The partnership has been controversial prompting Competition Commission of India (CCI), the country's fair trade watchdog, to scrutinize the deal. However, after months of close scrutiny, CCI didn't find any irregularities in the deal, prompting the two airlines to seal the deal.

The deal includes the actual 24% stake purchase worth US$380 million, US$150 million for a 50.1% stake in JetPrivilege Frequent Flyer program, US$70 million for the three slots at London Heathrow Airport, and the US$150 million deposited through HSBC.

In a fresh round of legal hurdle, CCS questioned the two airlines' partnership with regards to Etihad's 24% stake investment in Jet as both carriers operate flights to and from Singapore, making them subject to the host country's aviation regulation with CCS as the investigating body under the Competition Act of Singapore.

CCS's scrutiny centered on the partnership's international air passenger transport services specifically the two airline's flight operations that originate in Singapore to their respective home countries and elsewhere.

CCS has sent a notification seeking feedback from the public, as well as other stakeholders until July 11 this year, from which it will decide on the matter.

It has issued a notification in relation to the Competition Act's Section 34 that prohibits agreements between undertakings, as well as joint practices by associations with the aim to prevent, restrict, and distort competition within Singapore.

Moreover, CCS claimed that the alliance also includes code-sharing, pricing, marketing, networks, route and schedule coordination, customer service, and resourcing decisions between the two.

Etihad Airways is the national flag carrier of the United Arab Emirates whose headquarters are based in Abu Dhabi. It currently flies to over 85 destinations in more than 50 countries.

Jet Airways, meanwhile, is India's second largest airline in terms of passengers carried and market share. Its current route network spans across 18 countries to 70 destinations, 20 of which are international.

By: Pete Lee.