The insulation materials are used to reduce heat loss to/from the ducts with additional investment. This study aims to reduce this additional investment in the duct application by introducing an air gap between insulation and duct surface. It uses Life Cycle Cost (LCC) analysis to determine the economic benefits of the air gap considering four insulation materials for insulating the duct and natural gas as an energy source for chiller operation. The preliminary data regarding design and operating parameters were obtained from a renowned pharmaceutical company. The duct's annual energy loss was estimated for given operation hours in a year using the preliminary data and ambient conditions. The estimated energy loss through the duct is fed in LCC analysis to determine the impact of the air gap on optimum insulation thickness corresponding to the minimum LCC and payback period. The results show that the introduced air gap in an insulated duct lowers the optimum insulation thickness for the duct. As a result, the air gap maximizes the cost savings and minimizes the payback period. The expanded polystyrene is investigated as the most economical with maximum cost savings of USD 508.8-USD $766.8/m/year and a payback period of 1.15–1.17 years for the duct applications. Contrary, the air gap is determined the most effective in terms of cost and emission savings for the ducts insulated with rock wool. In conclusion, an air gap is an economical option for duct applications.