India’s largest-ever airline takeover deal, by Jet Airways of rival Air Sahara, has hit delays as the two carriers continue to await regulatory approvals.
Jet Airways announced in January that it had agreed to purchase 100% of Air Sahara from the Sahara Group in a cash deal that carried an “enterprise value” of $500 million. The agreement was subject to regulatory approvals being secured within 65 days.
India’s department of company affairs promptly approved the proposed deal, but the directorate general of civil aviation did not give its blessing for the transfer of Air Sahara’s landing slots and parking positions at airports before the 65-day period was up.
This forced Jet to extend by 90 days the deadline for the completion of the takeover of its smaller rival, and in the meantime they will continue to operate as separate entities.
Landing slots and parking bays are considered most important to Jet as it is difficult to expand operations at many of India’s airports due to a lack of capacity. Jet says “the enterprise value of the transaction remains unchanged at around $500 million” despite the extension of the time period for it to close.
Mumbai-based Jet is India’s largest domestic carrier with a market share of around 40%, while Delhi-based Air Sahara ranks third, after state-owned Indian Airlines, with a market share of around 10%. Both also have limited international operations.
If the takeover goes through it will represent the first consolidation from the current wave of deregulation in the fast-changing Indian market. ■