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Delhi and Noida airports gear up for competition
The Business Guardian
|January 05, 2024
A brewing clash between a new entrant in Noida and the established veteran in Delhi is poised to reshape the landscape of India's airport network. According to aviation consultancy firm CAPA India, the anticipated competition between Jewar Airport in Noida and Indira Gandhi International Airport in Delhi could intensify even before the former begins operations later this year.
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A pivotal factor in this competition is the discrepancy in the value-added tax (VAT) on aviation turbine fuel (ATF) for domestic services. Currently, Delhi airport imposes a 25 percent VAT on ATF, while Noida airport will only have a 4 percent VAT. The significant difference in tax rates is expected to impact capacity allocation by airlines and influence expansion decisions.
Given that ATF constitutes approximately 40 percent of an airline's costs in India, this tax differential could have far-reaching implications for the competitiveness of the two airports.
One of the key developments to closely monitor is the potential allocation of exclusive terminals to major airlines, particularly Air India and IndiGo, at Delhi's Indira Gandhi International Airport, which is operated by the GMR Group. A decision on this matter is anticipated in 2024, and its long-term consequences on international traffic patterns will need careful assessment, according to the CAPA India report.
Denne historien er fra January 05, 2024-utgaven av The Business Guardian.
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