If we gave away seats to Dubai, why not to Abu Dhabi? This seems to be the refrain, the argument upon which the Ministry of Civil Aviation is expected to build its case for justifying a manifold increase in seat entitlements given to Abu Dhabi, which is being questioned in the Supreme Court.

New Delhi: If we gave away seats to Dubai, why not to Abu Dhabi? This seems to be the refrain, the argument upon which the Ministry of Civil Aviation is expected to build its case for justifying a manifold increase in seat entitlements given to Abu Dhabi, which is being questioned in the Supreme Court.

The Ministry is one of the respondents to the petition filed by BJP MP Subramanian Swamy in the apex court. Swamy has sought a probe by the CBI into the role of the Ministries of Civil Aviation and External Affairs in amending the India-Abu Dhabi bilateral Air Service Agreement (ASA) which grants 36,670 additional seats to airlines between the two countries by 2015. As of now, 13,300 seats are permitted between the two countries.

Top sources in the Civil Aviation Ministry said in the case of Dubai too, the Government had faced stiff opposition just as it is facing now for Abu Dhabi and in the Dubai decision the Government stands justified today.

"We were suppressing demand artificially (in the case of Dubai). Till 2005, Indian airlines were using less than 4,000 weekly seats to Dubai out of 5000 allowed. But when the bilateral pact between India and Dubai was amended and we awarded almost 50,000 weekly seats, Indian carriers are now using almost 49,000 seats a week. So obviously demand was artificially suppressed," top sources in the ministry said.What these sources did not allude to was the controversy over the then Civil Aviation Minister Praful Patel awarding so many additional seats to Dubai, the indictment of Comptroller and Auditor General (CAG) over this decision and howit has lead to Dubai's Emirates airline becoming the largest carrier for Indians wanting to fly overseas.

Emirates today carries more Indian passengers on international flights than an any Indian airline!

So one way of looking at it is this: the Government is well aware that now, the designated Abu Dhabi airline Etihad, could also account for a significant chunk of Indian passengers wanting to travel abroad. This could, as we have said earlier, sound the death knell for Indian airlines like Air India.

The official sources quoted earlier said Emirates has been able to take away a chunk of India's international traffic since it uses Fifth Freedom rights (where an airline can pick up passengers from one country, take them to its home base and offer onward connections to a second country) which Indian airlines have not been allowed by other countries.

Besides questioning the award of so many seats to Abu Dhabi, Swamy's Supreme Court petition has also sought CBI probe "to determine if there was any abuse of power by any public servant to obtain any pecuniary advantage or valuable thing for the benefit" from either Jet Airways or Etihad Airways for getting the bilateral okayed. He has asked the court to revoke the bilateral pact reached between India and Abu Dhabi.

It is evident that Swamy has alleged large scale corruption in the ASA which has now been cleared by the Union Cabinet.

In his petition, Swamy has made Ministries of Civil Aviation, External Affairs, Commerce and Finance as respondents.

The Foreign Investment Promotion Board, Department of Industrial Policy and Promotion, aviation regulator DGCA and the two airlines involved in the equity deal are also respondents to his petition.He has also given expected gains to Etihad from the equity deal and bilateral enhancement: Swamy says Etihad stands to derive benefits worth almost Rs 10,000 crore every year through its equity deal with Jet. In the same petition, he has also alleged that "as a consequence of the very same bilateral/ MoU dated 24.04.2013 a reasonable estimate of losses that would be incurred by the Indian national carrier - Air India would be about Rs 2,555 crore per annum and the losses estimated by other domestic airlines would be about Rs 773 crores per annum."

In fact, Swamy says not only did Etihad get a largesse in the form of "unprecedented increase in capacity entitlement for itself i.e. up to 50,000 seats per week, as well as third country and domestic code sharing but by investing into the Indian carrier and entering into inter-se arrangements evidencing effective control over Jet Airways, it managed to get surrogate control and reap the rewards from the Jet Airways' share of the Indian bilateral, thereby effectively getting approximately 90,000 seats per week to and from India in contrast to the genuine entitlement of merely 13,300 seats."

The points Swamy has made in his petition have been made by him publicly earlier and some other MPs have also smelt large scale corruption in the undue haste with which the Ministry of Civil Aviation signed the amended ASA with Abu Dhabi. A Parliamentary Standing Committee has raised the matter of how this bilateral pact will kill Air India - but no questions have been asked of the Ministries of Civil Aviation, Finance, Commerce or External Affairs on this matter.

The biggest beneficiary of this revised ASA will obviously be Jet Airways, in which Etihad wants to pick up 24% equity stake for about Rs 2050 - the equity investment would have made no sense unless a commensurate increase in seat entitlements also happened. Etihad has paid a significant premium to Jet's share price in the equity deal on the basis of lucrative market opportunities which open up once the ASA is amended.

This allows Etihad to use Jet Airways as a domestic feeder service from India, so that Indian traffic may first be carried to Abu Dhabi and then provided onward connections to countries such as the Americas, Europe and Africa. Without waiting for the ASA to be approved, Jet and Etihad have already begun implementing sweeping changes in network of Jet, so that Jet picks up Indian passengers from more than 20 smaller towns and cities in India and offers them global connections via Abu Dhabi.

The official sources quoted earlier said till now, Jet was using Brussels as its international hub, now that will simply shift to Abu Dhabi. "What is the significance of this? There is no difference really whether Jet uses Abu Dhabi or Brussels as its hub. In fact, Jet will be able to pick up cheaper jet fuel at Abbu Dhabi".

Besides a quantum jump in seats, India and Abu Dhabi have also agreed to allow Jet Airways change of gauge - which means change of aircraft - at Abu Dhabi. This will facilitate Jet Airways' onward connections from Abu Dhabi. The ASA also provides for domestic and third country code share for carriers on both sides. This means passengers on either Etihad or Jet can derive benefits from 'earn and burn' rights on the two airlines' frequent flyer programmes.

The irony is Dubai, which is also a part of UAE like Abu Dhabi is, are now again clamouring for more seat entitlements from India. Since Abu Dhabi has been allowed, why not listen to these requests too? Research by aviation consultancy CAPA has already estimated that bilateral requests from four airlines from just the Gulf - Etihad, Emirates, Qatar and Air Arabia - could be in excess of 150,000 seats a week.

Emirates already uses 54,200 seats a week but wants another 50,000 weekly seats; Qatar and Air Arabia may have together asked for another 50,000 a week.