A new airport is coming up in Noida. It is being built by Swiss based company that won the contract to Build, Own, Operate the airport for 40 years. This airport is supposed to decongest the Indira Gandhi International Airport. All good so far. IGI needs decongestion.
But there is a twist in the tale. Last year IGI handled 4,29,000 odd flights. Assuming that each flight got a refill of ATF of 2500 Liters at 110 Rupees per liter, that is 2,75,000 Rupees.
Multiply that by 4,29,000 flights and you get a massive figure of 1,17,97,50,00,000 (Around Twelve Thousand Crores). Now Delhi Government gets 25% as VAT on this fuel. That would work out to around 4 Lakh Crores per year.
The problem is, VAT at Noida airport is going to be just 1%.
Airlines will make a beeline for Noida airport. Take the case of Indigo. For the sake of calculation, it flies 87 flights on the Mumbai-Delhi route every day. Just the back of envelope calculation shows that per flight it would save 1,22,500 Rupees and in a day that would translate to 1,31,00,000 (One Crore Thirty One Lakh Rupees) every day and in one year, Indigo alone would save 478 Crores on just this one sector! And there are Indigo flights coming into Delhi from all over the country and outside India.
Over all, Noida airport has the potential to save the airlines 4 Lakh Crores per year and leave Delhi Government poorer by that sum.
As Delhi is ruled by AAP and Noida falls in UP, this will be a stone that kills two birds in one shot.
As Delhi Airport is run by an Indian company but Noida airport is going to be run by a Swiss company, any loss of revenue to an Indian company has the potential to flow outside the country.
And it will also kill GMR, the company that runs IGI. The Swiss operator may take over IGI. Or maybe Adani will take over with a tacit understanding with UP Government that once it takes over, UP Government will increase the VAT.
And after the new operator has taken over, UP Government may increase VAT to 25%, with the main purpose served, that of killing two birds.