Jet Airways soars 11% as Etihad gets CCI nod to buy stake in its loyalty unit

NEW DELHI: Jet Airways rallied as much as 13.1 per cent in intraday trade on Thursday, a day after Abu Dhabi-based Etihad Airways got Competition Commission of India's nod for the purchase of 50.1 per cent stake in Jet Privilege Private Ltd (JPPL), a customer loyalty programme unit of Jet Airways.

The stock closed 10.93 per cent higher at Rs 234.45. It has hit a low of Rs 217 and a high of Rs 239.15 in trade today.

Clearing the transaction by majority, CCI said that the deal was unlikely to have any adverse impact on market competition as Etihad's purchase of 24 per cent stake in Naresh Goyal-led Jet Airways has already been approved and the two carriers were already partners in their respective frequent flyer programmes.

CCI was approached for its clearance by Jet and Etihad for this frequent flyer business deal on December 18, 2013. CCI asked them on December 24 to remove certain defects and provide additional information by January 2, 2014.

Under this deal, Etihad will acquire 50.1 per cent stake in JPPL subsequent to the hiving off of Jet's loyalty business into the subsidiary.

Valuation of this deal has not been disclosed.

Jet Airways and JPPL entered into a 'slump sale agreement' and 'commercial agreement' on November 19, 2013, for the purpose of hiving off the airline’s loyalty business into JPPL and to establish a commercial relationship between them.

Dissenting with this majority order passed by CCI chairman Ashok Chawla and four other members, one member Anurag Goel said the proposed deal was "likely to raise appreciable adverse effect on competition in the international air passenger transportation market, more particularly in those routes between India and Abu Dhabi".