Budget carrier SpiceJet is in renewed talks with rival low-cost airline IndiGo for a 7.5 per cent stake. It is also in similar talks with another competitor, GoAir, according to widespread media reports. However, both companies have declined to comment on the matter.

However, the two air-carriers are understood to have already held several rounds of discussions on the issue, according to the reports. SpiceJet has even appointed a merchant banker for this purpose, it said. 

 ''The talks are on with them (Go Air) for a merger or buying them out. However, nothing is imminent and there is no question of any deal as yet,'' a top SpiceJet executive was quoted as saying. About IndiGo, he said, ''We have talks with IndiGo off and on. We both are looking at ways to do business together. However, there is nothing concrete as yet.''

Last year, SpiceJet had appointed Rothschild as advisors to show it the way forward with the $100 million investment that US investor Wilbur Ross had put into the company.

Calculations based on the market share figures released by the Ministry of Civil Aviation earlier this week show that while a merger with GoAir or its acquisition would give SpiceJet a market share of 15 per cent, a merger with IndiGo as well would give it a hold over more than a quarter of the market. 

SpiceJet and IndiGo also have among the highest passenger load factors in the industry. At present, Kingfisher and Kingfisher Red command the biggest share in the airline industry, with over 26.7 per cent market share. Jet Airways and JetLite together account for 25.1 per cent of the market. SpiceJet has a 12 per cent market share while Indigo has 13.4 per cent, according to the MoCA figures.

The mergers would seem difficult to implement, as both Go Air and IndiGo own fleets manufactured by European manufacturer Airbus while SpiceJet has an all Boeing fleet. But the deal is likely to be simply for purchasing equity and not any merger. 

SpiceJet shares shot up during trade on Friday and closed with a 12 per cent gain.

Billionaire investor Wilbur Ross, who has a stake in SpiceJet, is believed to be pushing for a consolidation in the Indian aviation market. SpiceJet has been looking for a possible merger for the past few months. Reports had earlier indicated that it was in talks with GoAir for the purpose. 

Ross reportedly believes that the passenger carrying capacity is the key for the airline and the difference in fleets is an operational issue that can be addressed once more passengers choose the airline. 

Airline companies reported accumulated losses in excess of Rs10,000 crore during fiscal 2008-2009. Low fare airlines have seen their business move up in the last two quarters, after the economic slowdown begun to pinch. But they want to bring down capacity by nearly 20 per cent to reduce losses.

Rising airfares during the January-March quarter compared to October-December quarter has led to a 14 per cent decline in passengers. With ATF prices hiked by 6.7 per cent earlier this week, airline companies may be forced to raise fares again.