Noida’s Jewar Airport: A New Competitor to Delhi’s IGI?

The civil aviation minister, Rammohan Naidu Kinjarapu, has appealed to Delhi's Chief Minister, Rekha Gupta, to reduce the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from the current 25% to between 1-4%. This move aims to prevent potential flight diversions to the upcoming Greater Noida airport, which promises more competitive fuel pricing.

The Impact of VAT on Aviation

With fuel expenses constituting 40-45% of operational costs for Indian airlines, the high VAT in Delhi is a significant burden. The minister's letter highlights the risk of airlines shifting operations to Jewar airport, where a 1% VAT on ATF offers a considerable cost advantage.

Delhi's IGI at Risk?

Delhi's Indira Gandhi International Airport, leading in passenger traffic with 73.6 million passengers in FY24, faces potential business loss. The aviation industry and stakeholders are closely watching the Delhi government's response to the VAT reduction request, which could determine the future competitiveness of IGI Airport.