India's Government looks set to provide a Rs10 billion ($219 million) cash injection for loss-making Air India, which is struggling financially amid intense competition, weakening demand and increased costs.

Civil aviation minister Praful Patel told reporters in Mumbai that government-owned Air India is in need of a Rs10 billion cash injection, adding that "we have received a proposal" from the airline which is now being studied. He added that "Air India needs a capital infusion".

The cash injection would be used to increase the carrier's equity base and help it continue expanding its fleet as it faces more intense competition from new airlines.

Air India said last month that losses for the fiscal year ended 31 March were estimated at around Rs20 billion. The airline has seen costs increase sharply as a result of high fuel prices and it has been suspending some of its international services to help it cut losses.

India's domestic market has also been shrinking in recent months, as weaker economic conditions and increases in airfares have resulted in fewer people travelling by air.

Source: Air Transport Intelligence news