Jet-Etihad deal: 3 things that need clarity before take off

The buzz around a deal between Jet Airways and Etihad is picking up steam, but experts say that closing the deal may not be a cut-and-dried process. CNBC-TV18's Sunanda Jayaseelan and Animesh Das report.

Jet Airways chairman Naresh Goyal and Etihad CEO James Hogan have been doing the rounds in New Delhi even as their teams are learnt to be putting the finishing touches to a deal between their two airlines. But experts say there are a few issues that need ironing out before they can break open the bubbly.
One: There is a need for clarity on rules governing the number of board seats on an Indian airline that a foreign airline can hold. While FDI rules were amended last year to allow foreign carriers to pick up a stake in an Indian carrier, the number of board seats has not been spelt out just yet.
Two: The current rules governing global alliances seem more in favour of PSU carrier Air India. So Jet Airways may have some wrinkles to smooth over in this area.
Three: There are issues related to code sharing. Now Jet Airways has announced an expansion of its code share with Etihad on some routes... but experts are waiting to see how many more are approved before Jet and Etihad begin to develop a common network.
What are the contours of the deal, would it would mean traffic would be funneled through Abu Dhabi, how much will it be funneled through Abu Dhabi and second would be that will this deal be followed by code shares and deeper alliances?
Jitendra Bhargava, former ED, Air India believes so far the government is only reacting to challenges. It has to ensure that system constraints are addressed, he says.
However, most experts agree that these issues are not deal breakers. They expect the government to clear all proposals by Etihad once it goes to the FIPB. However, they say all that will probably happen only if the government puts these rules down on paper, instead of trying to deal with them on a case-by-case basis. So till that happens, they warn that it may take a while for the two airlines to sign the deal.