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  • Congressional Panel Requests MoCA To Specify What ‘Reasonable Profit’ Is For Airlines

Although’reasonable profit’ is one of the variables taken into account by airlines when determining tariffs, a parliamentary commission has noted that it lacks a clear definition. The Ministry of Civil Aviation (MoCA) has been advised to define it and develop a method to compute it. The Parliamentary Committee on Transport, Tourism, and Culture’s study, “Issue of Fixing of Airfares,” was released against a backdrop of worries about skyrocketing prices and requests for the imposition of fare restrictions on airline tickets.

The government is opposed to controlling airfares, according to the panel’s report, which was presented to Parliament on Thursday. This is because the government is concerned about how it will affect the sector’s growth, especially given that the majority of Indian carriers have had operating losses over the past three years. According to Yuktika Bhargave for The Print, the panel did ask the government to reconsider its policies so that travelers always receive a fair offer.

The committee led by Rajya Sabha MP Vijayasai Reddy V recommended that “the Ministry should develop a method or a formula, in conjunction with the airlines, to ensure that the idea of “fair profit” as stipulated specifically in Rule 135(1) of the Aircraft Rules, 1937, is adhered to.

The legislation governing air travel regulations is based on Rule 135 of the 1937 Aircraft Rules. In accordance with these regulations, airlines make tariff decisions after taking into account variables such a reasonable profit, operating expenses, service characteristics, and the standard tariff.

Such terms are “likely to be misunderstood, in addition to encouraging arbitrary actions,” according to the committee report, because they lack a clear definition.

“…’fair profit’ is incorporated into the ‘Tariff’ under the clause of Sub-Rule (1) of Rule 135 of the 1937 Aircraft Rules. ‘Reasonable profit’ and ‘usually prevalent tariff’ are not independent rules or guidelines. According to the panel, these terms are understood as intended.

Source- Travel biz


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