Recession hit public sector carrier Air India has started to work on cost saving measures at a time when it is facing huge losses on account on low passenger traffic and slump in aviation sector. In a recent decision, the Public Sector firm has formed a four member committee of experts to review the wage agreement with employees unions in a bid to save Rs 500 crore.

It has also announced to review all performance linked incentives (PLI) and flying allowances for setting its financial health in order. The carrier grappled with slowdown has also urged central government to provide financial assistance for its operations.

The country's largest air carrier by fleet size suffered losses of over Rs 3,000 crore in 2008-09 with cumulative loss accounts for about Rs 5,300 crore.

AI CMD Arvind Jadhav, Civil Aviation Secretary, M Madhavan Nambiar and E Bharat Bhushan, financial adviser in the aviation ministry discussed the matter with PM Dr. Manmohan Singh, apprising him grimmer financial situation the carrier has been going through.

A senior AI official said, "No matter how close you are to a relative (read government), if you're being given money by somebody, they will ask for accountability on how you spend the money."