The Telegraph
Since 1st March, 1999
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Jet-Sahara deal clears key hurdle

New Delhi, March 30: Paving the way for the merger of Jet Airways and Sahara Airlines, the aircraft acquisition committee today issued guidelines that allowed airlines to transfer route rights, parking slots and bays.

The civil aviation ministry had delayed approval for the merger proposal in the absence of clarity on these issues. The director-general of civil aviation (DGCA) had earlier said flying rights, routes, parking slots were scarce commodities. The civil aviation ministry had also indicated they should command a transfer price and had sought a policy directive in this regard.

Though the guidelines were approved today, their details would be issued next week, providing the much-needed framework for the merger.

Last week, Jet and Sahara decided to extend the deadline for the merger by another 90 days, after the initial 60-day period lapsed without much headway.

The committee, which has representatives from the civil aviation ministry, DGCA and the Airports Authority of India, said after the merger there would be no further transfer or lease of rights to a third party.

After the guidelines are announced, the airlines will formally inform the civil aviation ministry of the move.

Officials said the guidelines would be valid for other mergers among airlines, including the one between Air-India and Indian Airlines.

Sources said Jet would now initiate measures to integrate the operational procedures of Sahara with its own approach to work. It will treat Sahara Airlines as a 100 per cent subsidiary till it obtains all the approvals.

The actual merger will take place once the high court and the MRTPC give their verdicts. The pact between the two airlines, however, also provides that “if the agreement terminates, then advances paid will be repaid to Jet Airways (India) Ltd” without any interest being paid on it.

The Monopolies and Restrictive Trade Practices Commission (MRTPC) has ordered Jet and Sahara to give details of their agreement following allegations by both the Left and the BJP of manipulation of share prices of the two companies as well as violations of monopoly laws.

The subsequent DGCA move on the merger follows the MRTPC notice to the airlines. But sources add this is a routine practice and nothing much can be expected out of this as the “mere creation of a monopoly is as yet not illegal.”

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