Air India, the state-owned carrier, yesterday admitted it was seeking to pare its workforce by up to 50 per cent, as state oil officials accused India's two biggest private airlines of defaulting on $21m in jet fuel bills.

In the latest reflection of the gravity of the crisis facing India's airline industry, Raghu Menon, chairman and managing director of Air India, said the company would allow 15,000 of its workers to apply to go on unpaid leave for a period of three to five years.