Naresh Goyal being offered sweets by his wife in Mumbai on Thursday. (PTI)

Jan. 19: Naresh Goyal ? the man who claims to have entered the aviation business at 18 ? has stumped up $500 million (Rs 2,300 crore) to buy rival Air Sahara.

The deal, which signals the start of a wave of consolidation in India’s aviation industry, has already sparked howls of protest from smaller rivals and a ginger group of Left politicians. It will need to secure regulatory approvals and the process could take as long as three months. In the interim, the two airlines will continue to function independently.

Goyal, chairman of Jet Airways, told reporters in Mumbai that his airline would not take on board any of the liabilities Air Sahara has been burdened with. Industry sources estimate Sahara’s liabilities at Rs 800 crore.

“The liabilities are their problem. I am not going to take any liability through this acquisition. I am taking the airline business only,” he said.

The buyout brings a large cargo of benefits for Jet.

It will gain control of valuable airport infrastructure, including 22 parking bays across the country, flying rights to international destinations like Chicago and London, a roster of 134 daily flights and 24 domestic destinations, and almost 14,000 passengers Sahara flies every day.

Jet’s market share is expected to swell close to 50 per cent, though Goyal claimed it would be only 41 per cent. The quibble over the numbers could be important as Goyal’s detractors say he will now be able to create a monopoly to the detriment of the competition.

Civil aviation minister Praful Patel said his ministry and aviation watchdog ? the Directorate General of Civil Aviation ? would look into regulatory issues, but made it clear the scrutiny would not cover queries about possible abuse of monopoly power.

“This is really the job of the competition commission,” he said.

Sources said the deal included losses of Rs 150-300 crore run up by Sahara, which makes the acquisition cost Rs 2,450-2,600 crore.

Jet said it would fund the purchase with its own money, though the board is slated to meet two days later to consider raising funds abroad. “We are going to raise funds from our own resources. At present, we have no plans for further dilution of shares,” Goyal said.

Jet Airways has appointed a team to oversee the merger.

The deal was clinched in Lucknow yesterday and the Jet board approved it at its meeting today. The Jet stock rose 1.9 per cent to Rs 1149.90 on the Bombay Stock Exchange.

Speaking at his residence in South Bombay, Goyal squelched speculation he would use Air Sahara as a low-cost carrier. “I don’t believe in the concept. It will be integrated into Jet Airways.”

Jet does not intend to take on all of the Air Sahara staff. “We will absorb only suitable people,” Goyal said, sending a wave of uncertainty through the Sahara ranks.

Sahara group chief Subrata Roy issued a statement saying he would protect the jobs and salaries of those who weren’t hired by Jet. Employees who join Jet and find it hard to adjust will be allowed to return within three months, Roy said in an internal memo.

Aviation circles wondered whether Jet would use Air Sahara’s flight to Chicago to break into the US. Goyal denied he would use Air Sahara’s rights to enter the lucrative US market. Air Sahara now flies to five international destinations that include the US, UK, Singapore, Malaysia and Sri Lanka.

Although the Jet chief said the acquisition would be in the best interest of the company and its shareholders, there are many who feel the price of $500 million is high. Sources said Goyal is paying this price to obtain parking slots, engineers, and pilots.

“Air Sahara has a fleet of 27 aircraft. However, all of them are on lease. Having a fleet of these many aircraft on lease is an expensive proposition. Jet will soon have to take a call on them,” said an aviation analyst at a foreign brokerage.

Nikhil Garg, an analyst with Edelweiss Capital, is more cautious, but believes the acquisition will be beneficial for Jet.

“One has to wait for more details. We will have to see what specific assets and operating leases come for the price of $500 million. Moreover, there is the crucial issue of whether Sahara’s rights will be transferred to Jet,” he added.