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Jet, Sahara faulted for delay

Even though the deal was reportedly sealed in January, the DGCA was officially informed only in March.

india Updated: Mar 30, 2006 13:05 IST
Indo-Asian News Service
Indo-Asian News Service

The acquisition of Air Sahara by Jet Airways may remain grounded for quite some time as government officials nurse grievances over being kept in the dark about the whole process.

"They just never informed the ministry about their plans and proposals till last week," said a senior official of the Directorate General of the Civil Aviation (DGCA).

"The ministry came to know everything from the media and if they expected authorities to oblige them by following the media reports they are mistaken," the official said.

According to informed sources, the DGCA was not informed about a plan to acquire and merge the company as required.

Even though the deal was reportedly sealed in January, the DGCA was officially informed only in March.

"As it is we do not have norms on merger and acquisitions of airlines. And to complicate the situation further the two airlines submitted the details after prolonged delay and then expected us to act in an expeditious manner," a DGCA official said.

The situation came as a blow to Jet Airways chairman Naresh Goyal when the airlines was told that the government would not allow them access to the parking bays used by Sahara.

Nor will the acquired airline's flight schedules be used for Jet's services or to fly to the US under its own name on routes allocated to Sahara.

This eventually led Jet to take a fresh look at the deal and it sought renegotiations with Air Sahara.

Though Sahara refused to bring down the cost of the deal saying $500 million or "no deal", it, however, after prolonged discussions on Thursday agreed to allow Jet 90 more days to put things in order and execute the deal.

But Jet will immediately have to put in about Rs 5 billion in Sahara's kitty.

Goyal, who is now hopeful that the grace period is enough for "trouble shooting", said, "We are in favour of the deal which will also benefit the share-holders in the long run."

He said, "The government is quite liberal and am sure it also is in favour of growth for the industry. It is aware of developments happening worldwide and surely it would act knowing what is good for the country."

On January 17, Jet had said it would buy out rival Air Sahara for $500 million.

Jet had plans to merge the two airlines post-acquisition and operate a combined fleet of about 90 aircraft under the Jet flagship.

The deal has already got an endorsement from the ministry of company affairs.

First Published: Mar 24, 2006 19:27 IST