New Delhi, Feb 5 (IANS): The Union Cabinet has granted ex-post facto dispensation to Alliance Air, a 100 per cent subsidiary of Air India, to fly on international sectors between India and Sri Lanka.

A special dispensation is allowed for the interim period till Alliance Air deploys minimum of 20 aircraft or 20 per cent of total capacity, whichever is higher for domestic operations, a government statement after the Cabinet meeting said.

The ongoing strategic disinvestment of Air India does not include sale of Alliance Air. The government intends to retain the airline under its fold and is strengthening its operations so that the airline would become the national carrier post Air India sale.

India has close bilateral ties with Sri Lanka and our interest is to increase connectivity and to expand people to people contacts between the two countries, the government statement said.

Prior to this approval there was no commercial operation scheduled from Palaly and Batticaloa airports.