The decision in this regard was taken at the state cabinet.
Balakiran, who is presently Tourism director, will continue in that post, an official release said.
KIAL Managing Director V Thulasidas had submitted his resignation from the post few days ago following CBI probe into certain decisions taken when he was the Air India Chairman.
The resignation was accepted by the chief minister yesterday.
The CBI had registered three FIRs and a preliminary inquiry to probe alleged irregularities in the merger of Indian Airlines with Air India, the purchase of 111 aircraft and termination of services on profit-making routes during the previous UPA regime.
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