Air India is delaying $70 million insalaries for two weeks, citing a challenging economic environment.
The move will affect all of the airline's 31,500 employees who will see their pay delayed to July 15 from July 1, an Air India spokesman says from Mumbai.
"Everyone is aware of the global recession and the airline sector is among those most severely hit," he says.
He notes that most Indian airlines have resorted to paycuts or layoffs or both. Labor laws, however, prevent government-owned Air India from imposing layoffs or salary cuts.
"Liquidity is an issue right now," says the spokesman. "What is a better option? Cutting staff and pay? Or delaying salaries for two weeks?"
He says the airline awaits a cash infusion from the government, but he declines to provide details.
Indian Government statistics show the country's domestic passenger market shrunk 15% in April.
The statistics also reveal Kingfisher Airlines and Jet Airways/JetLite have overtaken Air India, which now trails a distant third.
India's civil aviation ministry said in a statement that the country's airlines in April carried 3.3 million passengers. The statement failed to mention the April 2008 figure, but local media reports said it was 3.9 million so the year-on-year fall was 15%.
Air India also recorded the lowest passenger load factor of all the carriers with 60%.