Star Air focuses on network expansion and cargo business to achieve profitability in FY25

Star Air, a regional airline celebrating its fifth year, aimsfor a profitable FY25 despite falling short of its FY24 revenue target of ₹700 crore. Delayed aircraft deliveries impacted capacity and revenues.

While specific profit figures weren’t disclosed, Star Air expects a 40 per cent revenue jump this year and a further 25 per cent increase in FY25, including a ten per cent revenue from its cargo business.

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

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“Across our previous Embraer E145 operations, we’ve consistently maintained operational profitability,” said Simran Singh Tiwana, CEO of Star Air, told businessline.

“This financial, we are adding four new Embraer E175 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.

Some Challenges Remain

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.

Its self-funded model focuses on stability and maintaining on-time performance. The airline has a year-on-year employee growth of roughly 1,000, and anticipate adding 250-300 new employees this year to support expansion plans.

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

Aggressive Network 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 Embraer E175 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 optimization allows us to compete effectively, particularly for longer routes where our Embraer E175 fleet can target 12-hour utilization compared to the typical ATR under-10-hour operations.”

Focus on Underserved Markets

Star Air’s strategy has been targeted under-served 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

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