New Delhi, March 29 -- GMR Airports, operator of Delhi's Indira Gandhi International (IGI) airport, has sought a cut in Delhi's value added tax (VAT) on jet fuel to as low as 1% from 25%, warning that the steep levy could divert airlines and passengers to the upcoming Jewar airport in the neighbouring Uttar Pradesh, where the fuel is taxed just 1%, according to letters reviewed by Mint.

GMR's appeal, through its airport joint venture Delhi International Airport Ltd (Dial), came just ahead of the launch of the National Capital Region's second major airport in Jewar, sharpening competition for traffic. With jet fuel accounting for about a third of airline costs, the tax gap risks higher fares and a significant traffic shift, the company sa...