NEW DELHI: Star Air, owned by Ghodawat Enterprises Pvt Ltd, expects revenue to rise to about ₹1,100 crore in FY26—nearly 70% higher than the ₹650 crore recorded last year—as the regional airline scales up operations, expands its fleet and raises fresh capital to double down on India’s smaller cities.
In FY25, the company reported revenue of around ₹650 crore, of which nearly a third, about ₹200 crore, came from viability gap funding (VGF), said Shrenik Ghodawat, executive director of the group. The company is privately held and is yet to file its FY25 numbers with the Ministry of Corporate Affairs (MCA).
VGF is a subsidy provided by the Centre under the UDAN regional connectivity scheme to ensure the commercial viability of select unserved or underserved routes. It is shared between the central and state governments and administered via the Regional Air Connectivity Fund Trust, with receivables typically realized within 30 days. Roughly 65% of Star Air’s network falls under UDAN, with the remaining 35% operating commercially. Load factors currently range between 70% and 75%.
The subsidy is typically available for three years from the start of a route, after which airlines must operate commercially. Fares on UDAN seats are capped based on route distance, limiting revenue upside. “Hence, GEPL is protected to a certain extent against soaring fuel costs; however, this benefit applies only to UDAN seats and lasts for three years from the commencement of the route,” rating agency India Ratings and Research (Ind-Ra) said in an April note.
That reliance remains a key feature of Star Air’s operating model. Ind-Ra noted the airline has a high dependence on UDAN support to sustain operations. In FY24, around ₹130 crore, or 36% of Star Air’s ₹360 crore revenue, came from VGF, according to its MCA filings.
“ ₹1,100 crore we will do this year (topline for FY26). Last year (fiscal), we did ₹650 crore,” Ghodawat said. “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,” he told Mint.
Ghodawat said 70-75% of Star Air’s routes are “effectively monopolistic”, either due to UDAN exclusivity or because deploying larger aircraft on those sectors is uneconomical. Pricing power is limited, as fares on UDAN routes are capped on a portion of seats.
On the question of profitability once UDAN subsidies taper off, Ghodawat noted that VGF is typically available for three years per route. He said the airline has been Ebitda-positive for four consecutive years, from FY21 to FY24, and “turned net profitable last year, without relying on one-off gains.”
Beyond subsidies
Founded in 2019, Star Air operates largely outside India’s busiest aviation corridors, focusing on direct connectivity between tier-3, tier-4 and tier-5 cities—an operating footprint that also qualifies it for scheme subsidies.
The airline currently operates eight Embraer aircraft with seating capacities ranging from 50 to 80 seats, serving 31 cities. It plans to induct four more aircraft over the next six months and eventually scale its network to 50 cities by deepening presence on existing routes while adding new destinations.
Unlike larger airlines that rely on a hub-and-spoke model centred on metro airports, Star Air runs point-to-point services such as Belgaum–Ahmedabad, Kolhapur–Ahmedabad, Hyderabad–Nanded and Bengaluru–Jharsuguda. These routes are primarily aimed at business travellers, who account for over 60% of the airline’s passenger base.
“There are people who are happy to pay for a 40-minute flight instead of a six-hour road journey or an overnight train,” Ghodawat said. “That day-return product is what we are optimising for.”
The strategy is supported by a tightly controlled fleet plan. While Star Air’s fleet is largely leased, it does not rely on sale-and-leaseback structures commonly used by India’s largest carriers. The airline purchased its first four aircraft outright, while the rest are taken on dry lease directly from lessors. As it scales toward a fleet of 40–50 aircraft over the next four to five years, it plans to use a mix of operating leases, finance leases and selective purchases, Ghodawat said.
To fund this expansion, the airline recently raised ₹150 crore in fresh capital and plans to raise another ₹200–250 crore next year, taking total equity mobilisation to about ₹350 crore over two years. “The next round is about fleet growth,” Ghodawat said.
Around ₹50 crore of the capital has been earmarked to set up a maintenance, repair and overhaul (MRO) facility in India, initially focused on Embraer aircraft. The remaining funds will be deployed towards aircraft deposits, digital systems, spares, tools and reliability upgrades. The planned MRO also reflects the airline’s efforts to manage rising dollar-denominated costs, as lease rentals and maintenance reserves are paid in dollars.
Mark D Marting, founder and chief executive at Martin Consulting, said, “Historically, subsidization of routes and ticket prices has not worked in India. Star Air has to ensure commercial viability beyond the three-year subsidy period and expand presence on routes that are profitable. Currently, the airline remains dependent on UDAN subsidies, but if aircraft induction plans materialise and new routes turn viable, operations could become more commercially lucrative. Sticking to an all-Embraer fleet for regional connectivity is a good move, giving them an advantage at several smaller airports.”
Competition remains limited on many of Star Air’s routes, as larger airlines generally avoid deploying jets on thin-demand sectors. However, other regional players such as Fly91 and the government-backed Alliance Air operate on some routes, along with major carriers like IndiGo and SpiceJet.
Star Air is part of Kolhapur-based Sanjay Ghodawat Group, which has interests spanning aviation, energy, real estate and education. Shrenik Ghodawat is the son of Sanjay Ghodawat, founder-chairman of the group.