Spicejet, GoAir in merger talks

Tuesday, March 10, 2009, 11:29 by Aviation Correspondent

SpiceJet, the low-cost airline based in New Delhi, India, is in negotiations with Mumbai-based GoAir, for consolidation.

The two airlines are exploring a potential merger of the two airlines or for SpiceJet to obtain a controlling stake in GoAir, reports in the Indian media have said.

The reports quoted sources as saying that Sanjay Aggarwal, chief executive officer of SpiceJet, had already met Jeh Wadia, managing director of GoAir, in this regard.

A report in the Business Standard quoted sources from both SpiceJet and GoAir saying that SpiceJet had recently made an offer to GP Gupta, Chief Financial Officer of GoAir, to join SpiceJet as chief administrative officer.

Sanjay Aggarwal had, on February 26, 2009, told an international news agency that SpiceJet wanted to establish a regional airline that would connect smaller cities in India, and that the airline would consider “buying opportunities” and expected consolidation in India’s airline industry over the next two years.

There was a need for more consolidation in India’s aviation market and there would be fewer airlines in India than at present, Aggarwal had said.

GoAir at present flies to the major Indian cities of Delhi and Mumbai, as well as to smaller towns such as Goa, Jammu, Srinagar, Jaipur, Ahmedabad, and Kochi.

Media reports say that GoAir, which has its main base at Chhatrapati Shivaji International Airport, Mumbai, has already applied for slots at cities like Chandigarh, Amritsar, Hyderabad and Bangalore.

The Business Standard also quoted an expert in the aviation industry as commenting that SpiceJet stood to gain from a merger with GoAir, since GoAir was considering expanding its fleet from five aircraft at present to 20 aircraft by 2011.

At present, SpiceJet, which started operations in May 2005, has a market share of 11.8%, and GoAir has a market share of 2.4%.

Recently, Wilbur Ross, an investor based in the United States, had invested $80 million in SpiceJet.

On its part, GoAir is reportedly on the lookout for investors.

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