Two Air India pilots were caught napping in business class while flight attendants in the cockpit accidentally turned off the auto-pilot.
As a result the crew were suspended.
The alleged incident happened at 33,000 feet on an April 12 flight from Bangkok to New Delhi, the Mumbai Mirror reported.
The pilots were woken out of their 40-minute nap and rushed to the cockpit to save the plane from a disaster that could have claimed the lives of 166 people onboard, the report said.
According to the report, co-pilot Ravindra Nath was the first to take a break, saying he needed to use the washroom 30 minutes into the flight.
Minutes later, Captain BK Soni called a second flight attendant into the cockpit and showed the two stewardesses how to operate the controls. He put the plane on auto-pilot and left to join his co-pilot for the nap in business class, the report said.
Air India spokesman G Prasada Rao said Captain BK Soni and the two stewardesses had been suspended. He denied the report that the pilots had allowed the two attendants to operate the aircraft.
"It is a serious matter. We are investigating the incident," he said.
The airline stressed that at "no point in time was the cockpit left unattended by the cockpit crew".
It also said: "During the incident, due to distraction the co-pilot had touched the auto pilot disconnect button momentarily. But the same was connected back.".
The incident raises fresh concerns over air safety in India.
Earlier this year, Air India suspended a senior pilot caught drunk just before he was to fly a passenger aircraft.
Also in the last few years, authorities have discovered at least half a dozen Indian pilots flying aircraft using faked documents.
In March the International Civil Aviation Organisation, the UN aviation watchdog, expressed grave concerns about India's air safety, placing it among the 13 worst-performing nations.
An investigation into the auto-pilot incident is being carried out by India's Directorate General of Civil Aviation.
"Following a safety violation, the airline has already suspended the people in question," said the agency.