The state has lowered ATF VAT from 29% to 16% at Chennai airport and to 1% at all other airports across Tamil Nadu.
Naidu welcomed the decision, stressing that cooperation between the Centre and states is essential to make air travel more affordable for passengers.
Industries Minister Virudhai Magal Keerthana said the move would reduce airline operating costs, improve regional airport competitiveness and encourage carriers to introduce new routes and increase flight frequencies.
The decision comes as airlines face mounting financial pressure from rising jet fuel prices, a weakening rupee and longer flight routes due to Pakistani airspace restrictions.
The tax reduction could ease operating expenses and potentially help moderate airfares, while supporting regional connectivity and aviation growth across Tamil Nadu.