Budget airline SpiceJet Ltd is in talks with the Wadia group-ownded GoAir for either a merger or to acquire a controlling stake, the Business Standard reported on Monday.
SpiceJet Chief Executive Sanjay Aggarwal met GoAir Managing Director Jeh Wadia on to discuss a deal late last month, the paper said, citing unnamed sources.
In February, Aggarwal had said SpiceJet would look at buying opportunities and expects consolidation in the Indian airline industry over the next two years.
GoAir currently flies to smaller Indian cities such as Jaipur, Ahmedabad and Kochi and has applied for slots to several more.
SpiceJet reportedly plans to set up a regional airline to connect smaller cities, the paper said.
GoAir was looking at increasing its fleet to 20 aircraft by 2011 from five at present, the report added.
SpiceJet's Aggarwal on Monday told Business Standard he could not "comment on anything relating to a deal at the moment". GoAir's Wadia also refused to comment, the paper said.
SpiceJet's Aggarwal could not be reached immediately for comment by Reuters.
SpiceJet and GoAir spokespersons declined to comment immediately.