Divorce before marriage

Why did Jet Airways withdraw from its proposed decision to merge with Sahara Airlines? The common view was that Jet Airways’ boss, Naresh Goyal, had refused to go ahead with the deal till his name was given security clearance to pick up a position in the merged board. Later, it was suggested that he would only pick up the airline if the negotiated price was brought down. His handlers claimed that it was too expensive and he wanted a reduction by about 40 per cent. Also, it was explained to the media that the decision to merge had been hurting both Jet and Sahara and their share prices had been falling ever since the merger had been announced. Sahara was also accused of not reflecting transparency of how it had been spending its money.

The security clearance to Jet Airways was denied by the home ministry as Goyal had failed to answer questions about the source of funding of the Isle of Mann-based company,

Tailwinds. There have been allegations that Tailwinds had been funded by the Dubai underworld. This was the reason for the United States government to prevent Jet Airways from landing there.

The matter for giving security clearance had come up when the National Democratic Government was in power. Then Goyal had met deputy Prime Minister, L K Advani, and managed to breathe easy. He also had powerful friends in the BJP including the late Pramod Mahajan who kept helping him. The antagonism displayed by Sharad Yadav towards him did not really hurt him.

After the Congress-led United Progressive Alliance government came to power he found support from Sharad Pawar and Praful Patel. The decision of Jet to take over Sahara was not only an attempt at market consolidation, but also a device for Sahara to cut its losses. There were also rumours that Sahara was made to give up its airlines to buy peace with an antagonistic Congress. Initially, the merger formalities went smoothly, but then something happened which sent political and aviation circles into a tailspin.

Did the merger come apart because of the Congress leadership’s antagonism with Sharad Pawar because he went out of his way to support BJP’s candidate Rahul Bajaj for a seat in the Rajya Sabha? Congress leadership was angry with Pawar, but there is nothing they could do about it. Anger against Pawar’s party is not the reason for Jet Airways withdrawing support, explained a senior minister. Then what is the real reason?

Highly placed sources claim that Goyal's security clearance by intelligence bureau and home ministry was linked to his withdrawal from Sahara, which was seen to be too closely linked with the government of Mulayam Singh Yadav. Authoritative sources claim that the message was conveyed to Goyal from some senior minister that the Damocles sword on him would continue to hang on him if goes ahead with his deal. A day after the last date for clinching the deal was over and Goyal chose to peel himself off from Sahara, he was given the clearance. There is now the likelihood of him even getting permission to take his aircraft to US.

Sahara has haemorrhaged due to Jet’s decision and it wants to get something out of the Rs 500 crore that is deposited in the escrow account. Sahara Airlines is in a bad shape and it would require great effort in both the courts and outside to revive its fortunes.