Jet Airways yesterday inked a highly anticipated acquisition deal to buy Air Sahara for $500 million, which will create India's largest airline with a fleet of nearly 80 aircraft.

Air Sahara since September has been looking to strike a deal because it needed financing to expand its network. The carrier held talks with Kingfisher Airlines parent UB Group last year, but UB wanted to take only a partial stake in Air Sahara. Jet Airways took the deal a step further with an all-cash, complete acquisition, which was favored by Air Sahara. The two sides have been in talks for months and were close to announcing a deal last week, but the parties did not reach a final agreement on the value of Air Sahara until late Wednesday.

Air Sahara will initially operate independently but will eventually become part of the Jet operation, and the Air Sahara name will disappear. Jet has about 40% of the Indian domestic market share, but the acquisition of Air Sahara will bump the share up to about half the total market. The two carriers both launched in 1993, but Jet has been growing much faster than Air Sahara. Jet has 50 aircraft in service -- mostly Boeing 737s -- and another 30 planes on order, according to Airclaims. Air Sahara has 27 aircraft in its fleet, mostly 737s.

Air Sahara is part of the large Sahara Parivar conglomerate and former United executive Rono Dutta is Air Sahara's president. Air Sahara has bilateral agreements with American and British Airways, and Jet Airways last year signed a code-share agreement with United.