In an effort to shore up revenue streams for Air India, the finance ministry on Monday ordered all central government employees to fly only on the state-owned flag carrier for their official travel?both domestic and international.

This is one of the steps the government is taking to lend confidence to a clutch of lenders the airline plans to tap for medium-term loans. Senior finance ministry officials said a revenue stream for the airline was better than leasing planes to augment its fleet, given the weak aviation market leasing would provide little comfort to the lenders.

The order states: ?For travel to stations not connected by AI, officials may travel by AI to the point closest to their eventual destination, beyond which they may utilise the services of another airline, which should also preferably be an alliance partner of the national carrier.? The order reverses the permission given to government employees to use private carriers, in December 2005.

The fiat will also apply to officials in autonomous bodies funded by the government of India. Of the 10.9 million domestic passengers on all carriers in the April-June period, AI has ferried 1.91 million, or 17.5%, according to data released by the government on Monday.

The National Aviation Company of India Ltd (Nacil), which runs AI, expects to post about Rs 5,000-crore loss in 2008-09. Nacil is facing a financial crisis after its borrowings rose sharply to Rs 15,241 crore in June 2009 from Rs 6,550 crore in November 2007. A part of the borrowings was for buying new aircraft. The merged company inherited an order placed in 2005 for 111 planes—68 Boeing and 43 Airbus—valued at nearly $15 billion at list prices.

Though AI is heavily over-staffed with over 30,000 employees for a fleet of just 148 aircraft, minister for civil aviation Praful Patel told a news agency on Monday that there will be no retrenchment. However, he added , ?redeployment of duties and a decrease in employee costs. But the way to do it is entirely up to Air India. It is the management which runs the company and not the government.?

The carrier has sought a bailout package of Rs 14,000 crore from the government. The sum has bloated by 250% from what AI demanded last year. The package sought included an equity infusion of around Rs 5,000 crore and a soft loan of Rs 7,000 crore. In addition, it has demanded Rs 2,000 crore as grant from the central government.

AI is also planning to create an international board that will advise it on turning around its operations. Although several names are doing the rounds, Patel said the members of this board are yet to be finalised.

?We have come up with some names but they have to get approval from the appointments committee of the Cabinet before becoming a part of the advisory body. It is too premature to discuss any names now,? Patel told the news agency.