Friday, August 04, 2006

Indian airlines regroup after collapsed deal

India's bullish aviation sector believes regulators’ fear that it would create a monopoly and 'camps' with access to the best airport infrastructure has led to the collapse of the high profile Air Sahara-Jet Airways deal.
Jet denied it had pulled out of the US$500 deal to acquire Sahara due to a miscalculation it overvalued its rival and agreeing a high price, but cited it did not receive the necessary approval by the dateline as its reasons.
The amount was almost double the offer made by other bidder Kingfisher. Jet had justified the high cost in return for airport rights held by Sahara.
The merger would have created the largest domestic airline with a dominant market share, leading to the formation of two 'camps' with Kingfisher and SpiceJet in one camp, and Air Deccan teaming up with the Jet-Sahara alliance.
Airline analysts believe this led to the country's regulator, Director General of Civil Aviation (DGCA), holding back the merger approval, in the absence of a clearly laid down norms for airline mergers.
04/08/06 Y. Sulaiman/ (press release)