Like I wrote yesterday, Jet Airways finally dried the ink on their partnership with Etihad Airways. One fourth of the value of the whole transaction is being generated by the frequent flyer program of Jet Airways, which was spun off into a separate company in December 2012. Etihad is going to pay $150 million for a majority stake in the loyalty program, which I assumed was going to be about 60% at least.

I tried valuing the different membership tiers to arrive at a value of each membership tiers, and this is pure speculation, but do tell me if you think this is in line with valuations you would expect to be a JetPrivilege member.

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This afternoon in India, Jet Airways’ Board of Directors put their agreement to receive a fresh induction of $380 million by Etihad Airways, who in turn will get 24% of the expanded equity capital of Jet Airways, thus making Jet Airways a part of the Equity alliance of Etihad Airways, where Etihad is sewing up partnerships with various airlines by picking up equity stakes in them. I first wrote about this possibility back in September and while the deal was close to being struck then, it took quite some back and forth in the few months ahead to come to a consensus.

Etihad confirmed later in the day that they were taking the 24% stake for $379 million dollars, and will also infuse $150 million into Jet Airways frequent flyer program JetPrivilege, and reciprocal earn and burn opportunities between both programs. Jet Airways already had sold their three pairs of London Heathrow slots to Etihad earlier, to receive $70 million in cash. Jet Airways was working as of last year to make a separate business entity for its frequent flyer program.

A part of the terms of the deal is to have Jet Airways make a hub in Abu Dhabi, and Jet Airways gets a preferential loan from Etihad’s lenders for $400 million, all of which helps Jet Airways retire its debt of $2 billion. There is also news that Jet could be leasing away some of its Airbus 330-200 planes to Etihad.

Also, while there is no news of Jet Airways wrapping up its current flights to the USA, the proposed increasing number of flights to Abu Dhabi will also be helped by transit to the USA with a pre-clearance, which may come into play soon. Jet has plans to start, along with Etihad, 23 new city pairs connecting into Abu Dhabi.

This deal clearly comes as a shot in the arm for the airline, where things were pretty bad past few months due to the debt situation. This also means a new business model will come into place with respect to the international flights, something I am keenly tracking.

Watch this space for more, and I am happy that my favourite Indian airline finally got a quality investor! I am finally hoping there will b be a Etihad/Jet Airways lounge at Mumbai & Delhi airports, something that has been missing for aeons since Jet Airways became an international carrier.

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The Wall Street Journal reported a few days ago, that the White House has agreed to open a Customs & Border Protection outpost in Abu Dhabi, which will help passengers flying out from the AUH airport to pre-clear American Customs & Immigration formalities before getting on that plane.

The CBP has been offering this facility to some countries, such as Canada, Ireland and its Caribbean counterparts, but this is for the first time it is going almost half way across the world to the Middle-East to offer such a service. Who benefits? Etihad Airways, but naturally, since they are the only ones who currently fly non-stops between the USA and UAE from that airport.

Interestingly, this news is coming out in the midst of the sequester cuts, which like View From the Wing writes, are going to add to travel times and delays. And guess the response? That Abu Dhabi is going to foot the bill on this one.

Obviously, Etihad and the Abu Dhabi are trying to size up to Emirates, which is now one of the bigger boys of aviation and are adding up as many USPs they can try to as a late starter, including the Equity Alliance.

And not surprisingly, a lot of criticism is coming from the American and European airline groups on this one, and from members of the Congress themselves. Quoting the link above,

Both the AEA and A4A claim the deal, signed recently between the US and the UAE and which will involve the stationing of US Customs and Border Patrol (CBP) officers in Abu Dhabi thereby allowing passengers to clear US immigration procedures when embarking in the Emirate, will give Etihad a “competitive advantage” while at the same time “being detrimental to a level playing field in the transatlantic aviation market.” The AEA went on the claim that the measure in Abu Dhabi has a distortive knock-on effect on the EU-US transport market, as at present, in order to avoid long security queues during rush hours at US ports of entry, European airlines are forced to change their flight schedules, putting “connectivity, commercial opportunities and passenger convenience” at stake. Echoing the AEA, the A4A called on the US Department of Homeland Security to drop the plan, saying it “disadvantages US citizens and other visitors who are not adequately served by the CBP today, often waiting hours to clear customs when returning to the United States.”

We’ll see how this plays out, but this sure may be a crowd puller for the Asian market which may look at AUH as a potential hub. Who knows the American airlines will drop the protests quietly as well and start a flight or few to AUH. And the next requests for such a gateway will come from, not surprisingly, another Middle-East based airline.

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Etihad is sending out targeted mailers to members of its Etihad Guest program, which offers double miles for those flying on Etihad flights before 30th May 2013 in their Coral Economy Class. This promotion, for those who receive it, is valid for tickets booked online, via the call center or via a travel agent as [...]

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While my experience with Etihad Guest (Etihad’s loyalty program) has not been the best till date, Etihad may be a serious contender for loyalty games in India given that sooner than later they will have a equity tie-up with Jet Airways. Etihad introduced a Gold Elite tier in 2011, and offered status matches to their [...]

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Jet and Etihad have been known to be trying to make a deal since September 2012. Speculation about this deal came out about that time period, since when the deal moved towards closure. At this moment, we heard there is a little stall, with Etihad being worried about the Indian Government’s policies on aviation. The [...]

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News of a strategic partnership between the airlines has been discussed since September 2012, and of late the news is hitting the peak, also helping the stock price of the listed entity Jet Airways in the meanwhile. While there was a lot of discussion earlier in the past week that grounded carrier Kingfisher was taking [...]

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In September, I had written about the possibility of Etihad investing in Jet Airways. Turns out I was not the only one who was thinking like that, even Jet & Etihad seem to be thinking on the same lines. As per Reuters, they have news from an insider Indian ministry of Civil Aviation that deal [...]

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I have to say all the money to run two massive airlines in a small country has not brought the best of systems and processes to the airline which wants to be the next Emirates. My first brush with the Etihad Guest loyalty program was when they announced a status match, and I applied for [...]

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Beginning of the month I had alerted all of you regular readers about the promotions going on with American Express, where there is an offer to transfer Membership Rewards (their reward currency) for cards issued in India. There are two promotions: Transfer your Amex Membership Rewards to British Airways Avios, and you could earn a [...]

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I don’t know if Citi is playing catch up with the American Express offer for 30% bonus miles on Avios transfers / Etihad Guest Miles or it is their own initiative, but they just got some new brownie points in my book. I’d been secretly wondering if there were ever going to be bonus offers [...]

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