**Star Air Aims for ₹1,100 Crore Revenue by FY26 Amid Expansion Plans**
Star Air, a regional airline owned by Ghodawat Enterprises Pvt Ltd, is set to increase its revenue to approximately ₹1,100 crore in FY26, marking a nearly 70% rise from the ₹650 crore reported last year. This ambitious growth is fueled by the airline’s expansion of operations, fleet enhancement, and strategic capital raising aimed at tapping into India’s smaller cities.
In FY25, Star Air generated around ₹650 crore in revenue, with about ₹200 crore, or one-third, derived from viability gap funding (VGF). This funding is part of the UDAN regional connectivity scheme, designed to support the commercial viability of underserved routes. The VGF is a subsidy shared between the central and state governments, typically realized within 30 days, and approximately 65% of Star Air’s network operates under this scheme.
The airline’s load factors currently hover between 70% and 75%, indicating a solid demand for its services. However, the VGF is available for only three years per route, after which airlines must transition to commercial operations. The capped fares on UDAN routes limit revenue potential, but they also provide some protection against rising fuel costs, as noted by India Ratings and Research (Ind-Ra).
Shrenik Ghodawat, executive director of Ghodawat Enterprises, emphasized that the airline’s growth strategy focuses on disciplined expansion rather than merely increasing capacity. He stated, “Our growth is coming from disciplined expansion, not chasing capacity for the sake of scale. We are building routes where there is willingness to pay for time.” Ghodawat also highlighted that 70-75% of Star Air’s routes are effectively monopolistic, either due to UDAN exclusivity or the economic impracticality of deploying larger aircraft on those sectors.
As for the future, Ghodawat acknowledged the challenge of profitability once UDAN subsidies begin to taper off, reiterating that VGF support is crucial for sustaining operations. With plans to raise an additional ₹200-250 crore next year, Star Air is positioning itself for continued growth in the competitive aviation market.
**FAQ**
**What is the UDAN scheme and how does it benefit Star Air?**
The UDAN scheme is a government initiative aimed at enhancing regional connectivity by providing subsidies (VGF) for airlines operating on underserved routes. This support helps Star Air maintain its operations and expand its network, particularly in smaller cities.