Air-India will pay the arrears with retrospective effect from 1990 -- in violation of the Department of Personnel (DoP) guidelines -- as part of a Memorandum of Understanding signed with the Pilots Guild in January this year. Official sources said that Air-India has agreed to pay arrears of allowances which have been increased by as much as 50 per cent, such as telephone allowance, which has been increased to Rs 1,000 from Rs 400; Type allowance which is Rs 2,700 a month for Commanders and Rs 1,950 for first officers. This is a clear violation of DoP guidelines which state that arrears can only be paid on salary and some fixed allowances.

The MoU, which was given formal approval last week in a board meeting held in Mumbai, has ensured that Air-India pilotsare among the best paid in the world with the take home packet of a Commander flying 100 hours approximating Rs 5 lakh a month and a co-pilot drawing Rs 3.50 lakh a month.

Air-India pilots have also managed to ensure that the loss of licence allowance of a Commander is hiked to Rs 30 lakh from Rs 8 lakh while a co-pilot gets Rs 22 lakh from Rs 4 lakh. The pilots have also managed an upward revision of their dollar allowances. Clause 9 of the MoU specifies that a Commander draws US $ 110 per day while a co-pilot gets $ 82 per day.

The pilots have also gained from an upward revision with effect from 1990 on a bewildering array of allowances including RT allowance, kit maintenance allowance which is up to Rs 1,200 from Rs 500, Special Parity allowance, overseas operations allowance, command pay which is now Rs 1,000 from Rs 600. Besides, house rent will form 30 per cent of basic pay with effect from 1992. The MoU justifies the concessions due to what is termed as ``a shortage of pilots''.

Sources say thatAir-India officials told the board that they had made provisions for the pay in their budget but may have to take loans from banks to finance it.