SpiceJet, GoAir, Indigo alliance likely

Sunday, April 19, 2009, 7:05 by Aviation Correspondent

Low-cost carrier SpiceJet is still in talks with their rivals GoAir and IndiGo for an alliance, reports Business Standard.The CEOs of SpiceJet and GoAir are said to be in talks to work out a profitable alliance for the both of them.

In end-March 2009, GoAir had said that there was no question of a merger with SpiceJet, rubbishing all the reports as rumors.

The Economic Times has reported that SpiceJet may pick up 7.5% stake in IndiGo, but the deal would be more of buying equity rather than a merger.

The merger rumors have led to a 12 per cent rise in SpiceJet shares at closing on April 17, 2009.

Some other reports say that billionaire investor Wilbur Ross, who owns stake in SpiceJet, is pushing for a merger.

If the merger does take place, it will shake up the aviation market. While SpiceJet has 12 per cent marketshare, according to the calculations presented by the Ministry of Civil Aviation, Indigo has 13.4 per cent share in the market.

A a merger with GoAir would give Spice Air a market share of 15% and an alliance with IndiGo will make SpiceJet hold over quarter of the market.

As of now, the aviation market in India is dominated by Kingfisher and Kingfisher Red who hold over 26.7 per cent market share. 25.1 per cent of the market has been cornered by Jet and JetLite.

Experts say that a merger with either of the company would be a difficult task as IndiGo and GoAir own fleets manufactured by European manufacturer Airbus while SpiceJet has an all-Boeing fleet.

Of late, the recession-hit aviation industry has to had to cope with falling customer demand and high aviation turbine fuel prices.

In March 2009, the number of domestic flyers, in the country, fell by 15 per cent over the same period in 2008.

On April 15, 2009, state-run oil companies increased ATF prices by 6.7 per cent,a third such hike in 31 days.

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