TNN

New Delhi, Jul 14: Cash-strapped Air India has been given a huge captive market. The finance ministry on Monday made it mandatory for all government officials to fly Air India while travelling on work, on both domestic and international sectors.

If babus are headed for a place not connected by AI, they will now have to fly to the point closest to the destination that’s served by the Maharaja. Thereafter, they can take any other airline, but preferably one that has a tie-up with AI.

And if an official, for lack of connectivity or seat availability, has to fly some other airline, he or she would need to take clearance from the aviation ministry, which had sought this rule change for babus three months back to help the cash-strapped AI.

‘‘In all cases of air travel, both domestic and international, where the government of India bears the cost of air passage, the officials concerned may travel only by Air India,’’ the finmin’s official memorandum, which also applies to autonomous bodies funded by the government, said.

With this virtual bailout, the government has reversed its own decision taken about three years ago. Back then, the government changed its fly-AI-only rule as part of an ‘‘austerity drive’’ so that the exchequer could get the best possible fares from whichever airline.

The new finmin directive may not have hurt government travellers, had AI been able to join Star Alliance, the world’s largest airline tie-up, as per schedule last year.

It would then have been able to give almost seamless connections to different parts of the world on partner airlines. Integrating the AI and IC codes of Air India and

Indian Airlines was a vital precondition for joining Star.

‘‘This project, also a vital part of merger, has been put on fast track. Meanwhile, we are increasing our code share agreements with other airlines,’’ said a senior AI official. The merger and code integration delay could cost AI dear as Naresh Goyal’s Jet Airways is learnt to be waiting in the wings to be the first Indian airline to become part of the Lufthansa-headed global alliance.

With combined losses of Rs 7,200 crore and a huge debt liability with new planes joining its fleet, Air India is likely to seek a bailout of close to Rs 5,000-10,000 crore from the government in the form of equity infusion and soft loans. The first tranche could well be the transfer of huge government travel business to AI.