Jet Airways' $500M Air Sahara Buyout Collapses
Jet Airways' $500 million deal to buy Air Sahara died at the June 21, 2006 deadline after months of disputes over escrow terms and headquarters control, with both airlines suing each other instead of merging. Air Sahara's frequent flyers were left in limbo for another year.
The biggest deal in Indian aviation just died on its own deadline. Jet Airways’ plan to swallow Air Sahara for $500 million — agreed back in January 2006 — fell apart on June 21 after months of fighting over escrow terms and headquarters control. Instead of merging, the two airlines are now suing each other.
Spare a thought for the people nobody consulted: Air Sahara’s frequent flyers. The collapse leaves them in limbo, banking loyalty on a carrier whose survival is openly in question. Every mile earned now is a bet that someone, eventually, still wants this airline.
Someone did — but at a discount. Jet came back with a cheaper $150 million offer in 2007 and finally got its prize, rebranding Sahara as JetLite.
Our take: the false start cost Sahara loyalists a year of uncertainty, and Jet saved $350 million by walking away first. When airlines fight over control clauses, it’s the loyalty members who pay the interest.