Even as the government plans to ease the eligibility conditions for Indian carriers to fly on overseas routes, it may reserve certain key international routes for Air India.
The national carrier is also likely to enjoy preferential treatment regarding the number of flights on lucrative routes, compared with other Indian carriers.
When traffic rights and schedules of private carriers like Jet Airways and Air Sahara for international operations are approved by the government, the expansion plans of Air India are likely to be considered.
Private carriers are, however, likely to be given traffic rights not utilised by Air India.
Air India will enjoy the preferential treatment for the next two years.
The proposal is in the final stage, according to officials.
This is part of a move by the government to strengthen Air India, considering the competition it has to face on international routes as a result of the entry of the private carriers. It comes at a time when Air India is preparing to raise money from the market through a public offer.
"There is a need to strengthen Air India, considering that private carriers are allowed to operate on international routes. This will help Air India retain some key frequencies in key sectors," said a civil aviation ministry official.
This traffic right reservation is in addition to the five-year restriction on Indian private carriers to fly to the Gulf. In December last year, when the government opened the international sectors to private carriers, the Gulf region was reserved only for the state-run carriers -- Air India and Indian Airlines -- for a period of five years.
The move will allow Air India to mount additional flights on routes with substantial traffic and the carrier will be in an advantageous position to pick sectors and frequencies it finds attractive.
At the same time, the existing compensation that Air India receives by way of government-mandated commercial agreements with foreign airlines, may be allowed to continue for some more time.
However, the government will review these mandated commercial agreements in sectors from time to time and phase them out over the next five years.
The government is also going ahead with its earlier plan to synergise the international operations of Air India and Indian Airlines.
The Cabinet had approved a proposal to this effect in December last year. The international operations of the two carriers will be synergised to ensure that the they do not compete on the same routes.
A recently commissioned study by the government points out that improved collaboration between Air India and Indian Airlines will generate Rs 340 crore (Rs 3.40 billion) for the government as a shareholder.
Of this, about Rs 238 crore (Rs 2.38 billion) can be generated through efficient integration of the networks of the two carriers.