The Indian government has approved a bilateral air services agreement with the UAE to increase the number of seats between the two nations over the next three years.
Under the accord, the two countries will be allowed to add 50,000 seats each week on designated flights until 2015, up four-fold from the existing 13,700.
The move has provoked controversy among several Indian politicians, who claim that it will have an adverse impact on India’s airlines and airport operators.
The agreement is expected to bring Abu Dhabi carrier Etihad one step closer to completing its acquisition of a 24 per cent stake in India’s Jet Airways.
The deal, which has been hit by delays, is expected to receive approval from Indian authorities very soon, Etihad said earlier this week.
If concluded, the transaction will mark the first acquisition by an overseas operator in an Indian airline since foreign ownership rules were relaxed in India.
Etihad agreed to pay $379 million for the Jet stake in April and invested an additional $150 million in the airline’s frequent flyer programme.