If the Prime Minister's Office has its way, Air-India may soon have to give up the revenue it gets from commercial and royalty agreements.

It is being suggested that the earnings from these arrangements should be given to the Consolidated Fund of India.

The idea was floated during the ongoing discussions between the PMO and the civil aviation ministry on the aviation policy.

Official sources said the revenue from these arrangements could be used for upgradation and construction work at airports.

The airline earns about Rs 246 crore (Rs 2.46 billion) per year from various royalty and commercial agreements, of which Rs 150 crore (Rs 1.5 billion) comes from code-sharing arrangements.

This revenue is used to block seats in other airlines for sectors where Air-India does not operate.

These commercial arrangements account for 5 per cent of Air-India's revenue, which was Rs 4,751.36 crore (Rs 47.51 billion) in 2001-02 and is estimated to be Rs 5,000 crore (Rs 50 billion) in 2002-03.

The airline has code-sharing agreements with over 12 airlines, including Aeroflot, Air France, Kuwait Airways, Air Mauritius and Malaysia Airlines.

The aviation ministry last year decided to enter into more such pacts because it proved to be profitable for the airline.

As far as royalty is concerned, Air-India charges $100-300 from the airlines, including KLM and Virgin Atlantic, depending on the sector.

In January, 2003, Indian Airlines had sought a share of the revenue from commercial arrangements on sectors that are common to both the state-owned carriers.

This demand was the fallout of the route rationalisation exercise undertaken by the ministry for the two airlines operating on the Southeast Asia and West Asia sectors.

Of the 23 countries and 113 city pairs served by Air-India and Indian Airlines, six countries and 15 city pairs are common.