A possible acquisition of Jet Airways will allow the Tata group to scale up its aviation business and take on IndiGo as it will gain large international market share and slots at busy airports.

While Jet Airways, with its 15.8 per cent market share, is a distant second in the domestic market (IndiGo is nearly thrice its size), it is the leader on international routes.

Jet Airways had a share of around 14 per cent on international routes in FY18, higher than Air India and Emirates.

A deal would also secure Tata group slots at the congested Mumbai airport where its airlines have been unable to expand their base. Vistara operates only 11 daily flights from Mumbai while AirAsia India does not operate to Mumbai at all. Jet has around 40 per cent and 25 per cent share of domestic and international traffic from Mumbai and is the market leader in Mumbai. In fact, it is the only large airport where Jet holds the number one position.

Tata and Jet executives have held preliminary talks and one such meeting took place in London two weeks ago.

A deal is not certain and could depend on several factors, including Jet Airways Chairman Naresh Goyal ceding control of the airline. Goyal owns 51 per cent in the airline which he founded 25 years ago. Etihad Airways controls 24 per cent stake.

The Tata group is also said to be evaluating how it would turn around the airline in an event of acquisition while group sources are calling discussions between the two as exploratory.

Both Jet Airways and the Tata group have termed the talks as speculation.

“Tata group ultimately has to decide what it sees as Jet’s long-term future — will it want to re-examine it strategy and fleet procurement? Will it want to merge it with Vistara? Merging Vistara with Jet and keeping one of their brands would help exploit Jet’s international routes better and help shore up domestic traffic and become a better rival to IndiGo and GoAir,” said aviation expert Saj Ahmad.

Jet Airways, which is currently facing a severe cash crunch, has a fleet of 124 planes, including mix of turboprop ATR, Airbus and Boeing planes. It has 220 Boeing 737 Max on order which will serve both as replacement of old leases and fresh addition.

As of September, Tata group-owned airlines AirAsia India and Vistara have domestic market shares of 4.4 per cent and 3.8 per cent respectively. Both the airlines operate Airbus A320 fleet. Vistara has placed an order for 13 A320Neo and six Boeing 787-9 planes and will induct another 37 A320Neo on lease.

“Navi Mumbai airport is still 3-4 years away from completion and acquiring Jet would give Vistara a larger pie of Mumbai traffic,” said Ameya Joshi founder of aviation blog Network Thoughts. He added that the Tatas could use Jet’s acquisition to checkmate IndiGo. “No other airline except IndiGo is in a position to expand and fill up Jet’s void in case of its collapse and that will make IndiGo far more dominant than today,” he said.

“Jet Airways brings all the advanatges of Air India minus the high debt. (Jet has debt of Rs 86 billion compared to Air India, which has debt of Rs 480 billion). Its operations are stable and is listed allowing for raising of capital from the market. The only challenge in possible transaction is Naresh Goyal giving up control,” said an industry observer. Jet’s related party transactions could be another area of concern for potential suitors as these came under scrutiny of the ministry of corporate affairs and income tax.

There are some, however, who believe that the Tatas will be better off without buying Jet Airways.

“I find it curious the possibility of talks between Goyal and Tata as there was a quite a bit of antipathy between the two previously. If indeed they are negotiating some kind of participation, it reflects a desperate situation for Jet Airways,” said Steve Forte, Jet’s former chief executive officer.

“The Tatas are already participating in two airline ventures in India and actually could benefit from Jet’s demise as could the remaining players in the market,” he added.

Immediate fund infusion will be critical for Jet, which faces a tough operating environment and is struggling to pay salaries and vendors on time.