Mumbai: The Tata Group could leapfrog domestic rivals to become an airline industry leader in India if its plan to acquire debt-ridden Jet Airways (India) Ltd is successfully implemented, three industry experts said. The Mumbai-based conglomerate already has two airlines under its belt—Vistara and Air Asia India—which are run as joint ventures.

“The successful acquisition of Jet Airways will mean a quantum jump for Tata Group’s full-service offering, Vistara, which would otherwise take about 12-15 years to get to the position of its older rival," said Dhiraj Mathur, partner and leader-aerospace and defence at PricewaterhouseCoopers Pvt. Ltd.

“Jet Airways has a lot of debt and liabilities which has to be resolved (by Tata group). But, if structured properly, it’s a great deal for the Tata Group," Mathur added.

Vistara had a 3.8% share of the domestic market in September, while AirAsia India had 4.4%. In the same month, Jet Airways, along with subsidiary JetLite, held a combined market share of 15.8%.

Acquiring Jet Airways will help the Tata Group gain scale—its domestic market share will grow threefold to 24%. InterGlobe Aviation Ltd’s IndiGo, the current market leader IndiGo, has a market share of 43.2%.

A senior executive of a full-service airline said on condition of anonymity that a takeover of Jet Airways will help Vistara start international operations overnight.

“Jet Airways has an established international presence, along with a strong network into Europe and Asia. It also has a strong network of agents, staff and infrastructure which will help Tata group gain a large portion of the international market share (from India) overnight after the acquisition," the executive said.

“Also, one of the main reasons why Vistara hasn’t been able to expand in India is the lack of slots at prominent airports like Mumbai and Delhi, which will no longer be a problem if the acquisition goes through," the official added. Considering Vistara always aspired to fly international and Indian airlines earn a higher yield on international routes, as compared to domestic routes, the acquisition is expected to place Vistara as a premium offering on both domestic and international front. However, any deal between Jet Airways’ owner Naresh Goyal and the Tata Group is unlikely in a hurry as a range of issues, including Jet’s steep debt and liabilities, need to be sorted out first.

Jet Airways had a net debt of 8,052 crore as of end-September. While 60% of the debt is dollar denominated, its aircraft debt stands at 1,800 crore.

A lawyer, whose clients include a prominent no-frills carrier, said on condition of anonymity that deals between airlines can be lengthy in India, especially when it involves foreign partners. While Vistara is a joint venture between Tata Sons Ltd (51%) and Singapore Airlines (49%), Abu Dhabi-based Etihad holds a 24% stake in Jet Airways.

“It could take at least three to six months to materialize after the completion of due diligence," this person said.

Tata Sons, the holding company of Tata group, said on 16 November that it is in talks to acquire a controlling stake in Jet Airways.

A Tata Sons spokesperson declined to comment to an email seeking insights into its plans for Jet Airways. A Vistara spokesperson did not respond to an email.

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