Air India will shift its headquarter from Mumbai to Delhi leasing out vacant space in its 23-storey iconic Nariman Point building.
The Air India board gave a formal approval to the proposal on Thursday.
The Air India building was constructed in the mid-1970s and has been Air India's HQ since then.
Indian Airlines's head quarters prior to its merger was Delhi and the merger required frequent travel of top company executives between the two cities.
Now the company has decided to retain top three floors in the building including the office of its chairman.
The airline may also retain its first floor sales and reservation office.
Air India has offices on twelve floors of the Nariman Point building. But on several floors it has vast vacant space which was leased to tenants earlier and is now free of litigation.
The building houses chairman offices of the chairman and others including those of commercial headquarters, network planning, corporate communications, accounts and medical department.
It plans to shift these offices too in other premises and let out space to corporates.
"We are not vacating the Air India building. "The chairman's office will remain. We will retain three floors in the building.
"The decision to shift headquarters was taken some time back but received formal approval of the board today,'' said airline chairman Rohit Nandan.
The shift of HQ to Delhi means that all the offices of directors in Mumbai, including commercial department, engineering, finance and operation will move to Delhi, another executive said.
Recently Air India inked a deal with State Bank of India to lease out four floors in the building and expects to earn about a Rs 1000 crore (Rs 10 billion) by March 2014 through monetization of five of its prime properties in Mumbai and Delhi.
Among the properties that have been shortlisted for monetization are: land beside Baba Kharak Singh Marg, New Delhi, Sterling Apartments in Mumbai, Air India colony in Kolkata, land on Sowri Palayam road in Coimbatore and land in Chennai.