Sources in AI said these suggestions were discussed at a meeting in Mumbai on Thursday between Tariff Commission chairman Vijay Kelkar and the board of directors of the airline. Kelkar is heading the committee appointed by the government to devise a turnaround strategy for Air India.

The other recommendations of the report include a strategic alliance between Air India and a European carrier -- preferably British Airways or Air France.Kelkar asked the board members for their suggestions and inputs at the meeting on Thursday. Earlier in the day, he met the department heads of the airline. Kelkar also accepted a report prepared by IL&FS on the financial restructuring of Air India. AI has reported losses for the last four years.

The airline isexpected to post a loss of Rs 200 crore in 1997-98. IL&FS was appointed by the Kelkar Committee to suggest ways to maintain the financial viability of the airline.

Kelkar had suggested a Rs 1000-crore financial package for the turnaround of Indian Airlines. The government has yet to implement the Kelkar committee report on Indian Airlines, which suggested a monetary grant from the government and equity infusion to put the airline on its feet. A disinvestment of government stake in Indian Airlines was also part of the suggestions.

Meanwhile, the board of directors of Air India was presented with the budget estimates for 1998-99. It is estimated that AI will post a loss of around Rs 340 crore in the current fiscal.

However, the losses may come down if new aircraft are inducted in Air India. Air India is currently operating on a sharply depleted network due to lack of aircraft. The airline has withdrawn from strategic routes in Europe and Africa due to capacity constraints.