Star Air to focus on network expansion and cargo business

Star Air, a regional airline celebrating its fifth year, aims for a profitable FY25 despite falling short of its FY24 revenue target of ₹700 crore.

While the ariline did not disclose specific profit figures, it expects a 40 per cent revenue jump this year and a further 25 per cent increase in FY25, including a 10 per cent revenue contribution from its cargo business.

The airline aims to carry 1 lakh passengers per month, a 40 per cent increase from its existing numbers.

“Across our previous 145 operations, we’ve consistently maintained operational profitability,” Simran Singh Tiwana, CEO, Star Air, told businessline.

“This financial year, we are adding four new 175seater aircraft on lease, albeit with a temporary grounding upon arrival in India. Despite potential variations in profit percentages due to our expansion, the overall top line is projected to see significant improvement. While the percentages may not mirror previous year numbers, we anticipate satisfactory results from the expanded operations,” he elaborated.

However, Tiwana admits to missing revenue target for FY24. “We’re falling short of that target [₹700 crore],” he said.

Delays in aircraft induction, by around 75 days for the current batch, have had a direct impact on capacity, and subsequently, revenue.

“While profitability has not been significantly affected, there’s been some impact due to unabsorbed costs incurred in anticipation of timely aircraft arrivals,” he explained.

REVENUE AND FUNDING

The regional carrier saw a 40 per cent increase in revenue this year and anticipates a further 25 per cent increase (over FY24 numbers) next fiscal. Star Air is also “actively seeking external funding”. Its selffunded model focuses on stability and maintaining ontime performance.

The airline has a yearonyear employee growth of roughly 1,000 and anticipates adding 250300 new employees this year to support expansion plans.

“Our focus on organic growth allows us to prioritise stability and ontime performance, which are crucial for customer satisfaction,” explained Tiwana.

AGGRESSIVE EXPANSION

Star Air has ambitious plans for FY25.

The airline aims to increase its network to 60 routes from the current 50, adding four new Airbus A320175 aircraft.

This fleet mix allows them to compete effectively on longer routes.

“The new aircraft will be a major step for our network expansion,” said Tiwana.

“This mix optimisation allows us to compete effectively, particularly for longer routes where our A320175 fleet can target 12hour utilisation compared to the typical ATR under10hour operations.”

Star Air’s strategy has been targeted underserved markets “with less competition”.

The airline strategically offers business class on some routes and leverages a fleet optimized for different lengths. Over 20 per cent of its routes are profitable without government subsidies.

The new focus is to expand beyond new routes. Star Air aims to serve 100,000 passengers monthly over the three months, a 40 per cent increase.

Additionally, the airline has partnered with SpiceJet’s subsidiary, SpiceXpress, to enter the cargo business, with the potential to contribute up to 10 per cent to its revenue in “the coming fiscal”. “The partnership with SpiceXpress is a significant boost for our cargo revenue stream,” he said.

Across our previous 145 operations, we’ve consistently maintained operational profitability

SIMRAN SINGH TIWANA

CEO, Star Air