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SpiceJet, GoAir In Merger Talks: Report

09 March, 2009

This seems to be a move that has some logic. Indian low cost carriers SpiceJet and GoAir are said to be mulling a merger. Business Standard on Monday reported that SpiceJet CEO Sanjay Aggarwal and GoAir Managing Director Jeh Wadia had met late last month to discuss a potential deal. Both the companies have refused to comment on the development.

A merger of these two airlines have lots of synergies. SpiceJet is a stronger low cost carrier with 11.8% market share and is connected to about 18 major destinations including state capitals, metros and commercial centres. GoAir is still a toddler with just 2.4% share of the market, and is connected to only seven cities. 

SpiceJet, which last year received $80 million funding from WL Ross & Co and $20 million Goldman Sachs, is also financially strong, while GoAir’s attempts to raise capital hasn’t been fruitful yet.

While a deal may be still in early stages, this could be worth exploring for both the airlines.

In an earlier instance of consolidation in airline business in India, the UB Group had bought Deccan Aviation which ran low cost carrier Air Deccan. The airline was renamed Kingfisher Red following the merger. UB Group runs Kingfisher Airlines, and the group now has a combined marketshare of 27.6%, followed by Jet Airways and Jetlite combination’s 25.1% and Air India’s domestic share of 16.7%.

The other independent smaller carriers include IndiGo Airlines, South based regional carrier Paramount Airways and North’s MDLR Airlines.

 


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SpiceJet, GoAir In Merger Talks: Report

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