Star Air targets ₹1,100 crore turnover in FY26, bets big on regional connectivity

₹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.