The inauguration of Noida International Airport at Jewar has brought renewed attention to a significant cost disparity in Indian aviation: the difference in jet fuel taxation between Delhi and Uttar Pradesh.
Delhi currently levies around 25% VAT on Air Turbine Fuel, compared to roughly 1% in Uttar Pradesh.
Given that fuel accounts for 30–40% of airline operating costs, the gap is considerable. On a single narrow-body flight between Delhi and Mumbai, airlines could pay close to Rs 96,000 more by refuelling at IGI rather than at Jewar.
Industry stakeholders argue that this differential is not merely a cost concern but a strategic one. Airports with lower operating costs tend to attract greater airline capacity, which in turn shapes connectivity and passenger traffic across a region.
With Jewar positioned as the NCR’s second international gateway, there are growing concerns that the tax structure could gradually shift, fuelling operations and, eventually, airline capacity away from Indira Gandhi International Airport.
The debate is unlikely to resolve itself quickly, but the timing of Jewar’s launch has made it harder to ignore.
