However, in this case, the investment cannot be considered under the transportation service category, as it was for the airline’s loyalty programme, he added.
In an email response, Etihad Airways spokesperson said, “Etihad has not been contacted by the Enforcement Directorate. Etihad acquired its share in Jet Privilege Private (JPPL) nearly six years ago in compliance with all regulatory requirements. Any queries relating to JPPL should be made directly to them.”
Last month, the services of Jet Airways
were grounded due to cash crunch and piling debt. While the deadline for submission of binding bids for Jet revival is May 10, there’s no sign of any serious investor at this point.
This case was referred to ED after the government had received complaints about a breach in FDI norms.
Foreign direct investment limit for scheduled air transport service/domestic scheduled passenger airline and regional air transport service was raised a few years ago to 100 per cent, with FDI up to 49 per cent under the automatic route. FDI beyond 49 per cent requires government approval.
Before the 2014 deal, Jet was managing its frequent flier programme in-house. At that point, it had several tie-ups with hotels, retail and lifestyle brands. Outsourcing the process meant transfer of the points liability to a new company.
An entity that carries out the loyalty programmes needs to report the fair value of the liability of points to the company in its balance sheet.