A real estate boom fuelled by a bus network in the sky?

In today’s Finshots we tell you about what’s all the talk around regional air travel and how it might change things from land to logistics.
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The Story
If you live near a dusty old airstrip that hasn’t seen a plane in years, there’s some compelling reason not to move. That strip might soon be more valuable than a flat in a nearby metro city. Because Tier-2 and Tier-3 skies are about to get crowded. And no, not with giant jets, but with smaller regional aircrafts. The kind that seat 20–30 people, land on shorter runways, and could turn forgotten towns into buzzing economic zones. Aviation folks are calling it the next connectivity revolution; investors and speculators, meanwhile, say it could spur a real estate boom.
So let’s understand this better.
India has 450-odd airstrips but only 157 are operational. The rest are scattered across the country like post-independence relics. And that means that over 60-70% of the country's aviation infrastructure is never utilised.
But these strips are suddenly back in the spotlight as the government wants more people flying.
To fix this, the government even rolled out UDAN (Ude Desh Ka Aam Naagrik) in 2016. The idea was simple: revive sleepy airstrips, get private airlines to fly short regional routes, and cap ticket prices at ₹2,500 for an hour-long journey so the average Indian could afford to fly. It was bold, ambitious, and briefly effective. The government subsidised routes. Taxes on aviation fuel were slashed. Airlines started testing new circuits like Hubli to Kochi or Jamshedpur to Bhubaneswar.
Still, a scheme only goes so far. 114 UDAN routes have since shut down. Airlines found it hard to fill flights and aircrafts flew half-empty. And when subsidies for carriers ended, so did many routes. The viability gap was just too big and the economics rarely worked out.
Perhaps the missing spark was private ambition. And that’s where both legacy players and startups are trying to capture a pie of the industry.
Take LAT Aerospace, for instance. The new venture, backed by Zomato’s Deepinder Goyal, doesn’t want to be an airline in the traditional sense. It wants to build a “bus network in the sky.” Walk in, fly out with small planes, small airports, short travels. A solution to the simple problem: “Why is regional air travel expensive, infrequent, and out of reach unless you live in a metro?”
Sure, the idea isn’t new but Goyal might just have the tech DNA, capital, and risk appetite to finally make it work. And LAT’s not alone. Other regional operators are now expanding and some logistics players are quietly eyeing the same air routes.
All of which could have a few major consequences.
The moment you connect small towns with predictable, high-frequency air routes, their economics change. A 9-hour road trip becomes a 1-hour hop. And where connectivity improves, land values usually follow.
Look at Navi Mumbai. Property rates near the upcoming airport have doubled in the last five years. And that’s the case with Bengaluru, Hyderabad, Greater Noida too. Now imagine this playing out across 100+ smaller towns. One day they’re struggling with train delays, the next they’re linked to a business hub by air. And with that link comes the real estate flywheel, from warehouses, hotels, rental demand to better municipal services, and eventually… gentrification.
Sidebar: Gentrification is when a neighbourhood gets a makeover, attracting wealthier residents and new businesses.
This isn’t just about moving people too. What people aren’t talking enough about is how small aircraft might become the back-end rails for India’s next big logistics evolution.
Remember how quick commerce players created dark stores in every corner of the city to enable 10-minute delivery? The same could happen with air. Most logistics heavy companies are already planning for this air hub and spoke model. Only instead of 2 km delivery zones, we’re talking 200 km cargo exchanges. Amazon India already runs its own air cargo operation with leased Boeing 737s. But that’s just between metros. With smaller aircraft and compact “air depots,” even Tier-3 cities could get next-day logistics.
In fact, LAT has suggested that its “air-stops” could be no bigger than a parking lot, placed closer to where people actually live and work. And that changes the math. Logistics networks with land banks (think quick commerce players, industrial parks, or even local retail chains) suddenly have an aerial distribution channel within reach. That also changes the total addressable market or TAM for these players entirely. Road and rail are no longer the only options. There's a third lane that's faster, leaner, and if done right, cost-effective. So it’s not hard to imagine logistics and quick commerce firms eyeing this as a natural extension of their ground game.
But here’s the first big contradiction.
Regional aircraft are notoriously tricky to operate. Fuel is one of the biggest costs (30-40%), and it’s fixed across aircraft types. Whether you’re flying 15 passengers or 180, the cost, on a per kilo litre basis, remains the same. That means smaller planes end up with higher per-passenger costs. And since regional operators want to keep fares affordable to serve their target audience, they have to maintain consistent high passenger load factors just to stay afloat. Unless you're flying full almost all the time, or heavily subsidised, the maths doesn’t quite add up.
Then there’s the pilot shortage.
India had around 11,700 active pilots in 2024. But we need closer to 20,000. And while the country issued 5,700 CPLs (commercial pilot licenses) in the past five years, only 2,900 commanders or captains (who have full responsibility of the aircraft) were trained in the same period. Which means we now rely heavily on foreign pilots by issuing Foreign Aircrew Temporary Authorization (FATA) licenses just to bridge the gap. And small aircrafts need more skilled pilots since you’re landing on shorter runways, in less-controlled airspace, with minimal backup infrastructure.
And lastly, there’s also a capability crunch.
Aviation regulators aren’t known for agility. LAT’s own launch is being closely watched because it may not just be a regional airline operator but also a manufacturer. And if it plans to build planes as well as fly them, timelines could stretch into years.
Just ask National Aeronautics (NAL), which spent years trying to get Saras, its indigenous 14-seater aircraft, off the ground.
Add to that the fact that building micro-airports isn’t easy. Even a no-frills airstrip needs land, safety approvals, air traffic coordination, fuel stations, fire services, and security protocols. Most regional airports don’t meet minimum safety norms. That’s a regulatory headache nobody wants to talk about.
So yeah, while the idea of regional air travel sure sounds like a breakthrough, it’ll need serious muscle across policy, capital, regulation, and execution.
Yet this feels different from previous waves of aviation optimism as there’s a broader ecosystem taking shape. It’s startups, investors, listed companies and even real estate developers who’ve started advertising proximity to “proposed airstrips” in Tier-2 towns.
The moment one player proves the model, others will pile in. Just like budget airlines took over the skies after a few cracked the unit economics.
Sure, not every small town will become an aviation node, and not every airstrip revival will lead to a land price rally. But the larger narrative around this is that India is keen as well as moving from highways and metros to air access as infrastructure. And that might very well change where people build.
So if you spot a group of surveyors pacing around your town’s abandoned lands, don’t be surprised. They might be measuring the future.
Until then… keep an eye on the skies and maybe on the land underneath too!
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