Delhi vs. Jewar airport fuel tax competition
GMR Airports is pushing for a reduction in Delhi’s jet fuel tax, warning that the current high rates could drive airline traffic to the new Noida International Airport (Jewar). The company has requested Delhi to lower the Value Added Tax (VAT) on aviation turbine fuel (ATF) to a range of 1–4% from the existing 25%.
The concern stems from the competitive advantage that Noida International Airport will have due to its significantly lower ATF tax rate of just 1%. GMR Airports argues that maintaining the current tax structure in Delhi could result in airlines shifting their operations to the new airport, impacting Delhi’s aviation revenue and market share.
The appeal highlights the intensifying competition among airports in the Delhi NCR region. With Jewar Airport set to commence operations, Delhi Airport faces pressure to offer more competitive pricing and incentives to retain and attract airline traffic. The reduction in VAT on jet fuel is viewed as a critical step to level the playing field.
If Delhi agrees to the tax cut, it could provide a significant boost to the aviation sector in the region, potentially leading to lower fares and increased passenger traffic. However, the decision also involves balancing revenue considerations for the Delhi government, which currently benefits from the higher VAT rate.
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