The government of Tamil Nadu, led by Chief Minister M.K. Stalin, has implemented a major reduction in the Value Added Tax (VAT) applied to aviation turbine fuel (ATF). Under the new policy, the tax rate at Chennai airport has been slashed from 29% to 16%. In a more aggressive move to encourage regional connectivity, the tax rate at other airports throughout the state has been reduced to 1%.

This policy change has been welcomed by central government authorities, who view the tax cut as a positive step for the aviation sector. By lowering the cost of fuel, which is a primary operational expense for airlines, the state government aims to make air travel more affordable and incentivize carriers to expand their operations within Tamil Nadu. While the state government has framed the decision as a strategic economic measure, the central government's public approval highlights a rare moment of alignment between the state administration and federal aviation policy goals. The reduction is expected to improve the financial viability of regional routes that were previously considered less profitable due to high fuel costs.