Determined to realise his dream, Mallya started his airline in May 2005. As new players entered the segment, all airlines began to bleed. Gopinath and Mallya would bump into one another time and again, and discuss collaborating on engineering and other ways to save costs. But collaboration was a far cry, when poaching of employees between the two was rampant. In an atmosphere of mistrust, no headway could be made on the merger.

In December 2006 (after Gopinath realised he urgently needed to raise money), Mallya and Gopinath met at the former’s house in Mumbai and seriously discussed a possible merger. Gopinath argued that a merger would not work because of culture problems (Air Deccan’s pilots stay in guest houses, air hostesses don’t get company vehicles, etc.,). Mallya didn’t think much of it, arguing that he manages to sell “both premium and low-priced whisky”.

Meanwhile, Mallya sent feelers to senior executives at Edelweiss Capital — which was also working closely with the UB group — that he was quite seriously interested in Air Deccan. A few investors did show interest in Air Deccan, including Air Arabia, which was keen to pick up a stake. US-based Texas Pacific Group (TPG) did a due diligence and met the airline’s senior employees. But, after the initial interest, TPG went slow. That raising money for Air Deccan was not a breeze is evident from the fact that a similar exercise for Mumbai-based airline SpiceJet — handled again by Edelweiss — took only three months, against five for Air Deccan. “At this stage, Gopinath’s primary need was to close the deal,” says a source.

Then, in March, Anil Ambani invited Gopinath to meet him at his Mumbai headquarters. The meeting lasted four hours, according to sources, and the two examined if there was a match of ideas and vision. According to associates close to Gopinath, Ambani had argued that Reliance Infocomm and Air Deccan had huge synergies, going to every nook and corner of the country and that Gopinath was a man of the same mould as his father Dhirubhai Ambani. He also indicated that unlike other investors who would come in for a few years and cut their losses if things didn’t go well, if Reliance ADAG came in, it would be for life. In return, they needed control.

Following this, two more meetings were held, with the last one in May. Reliance ADAG had started its due diligence and had visited the Air Deccan headquarters in Bangalore, according to sources. The CFOs and lawyers of both companies were working out the details of the deal. Negotiations were in the final stages and Ambani thought he had it in hand. He would invest over Rs 1,000 crore in Air Deccan for a controlling stake. But even before the Reliance ADAG-Air Deccan deal could enter its definitive stage, Mallya had announced his deal. “It would be fair to say that Mallya took the deal from under Ambani’s nose,” says one source.