Troubled Indian carrier Kingfisher Airlines has flown into fresh turbulence after one of the country's busiest airports told it to pay its bills or be grounded.

Mumbai airport bosses have told the cash-strapped airline, which is India's third-largest by market share, that it needs to pay Rs900 million rupees ($17.6 million) in outstanding charges.

Kingfisher has been placed on 'cash-and-carry' mode to be able to continue landing and parking its jets at the airport, said a spokesman for Mumbai International Airport Limited (MIAL).

This means the airline, which operates most of its flights from Mumbai and New Delhi, has to make daily payments to MIAL, instead of the usual monthly charges.

The spokesman said the airport had asked Kingfisher to pay daily charges of 5-6m rupees, half of which goes towards operating costs and the balance towards 'recoveries'.

An airline spokesman on Thursday sought to reassure passengers that flights would continue to operate 'as normal'.

Loss-making national carrier Air India says it is implementing a financial restructuring plan which will cut its loan interest payments by nearly $200 million a year.

India's central bank last week approved a move to extend the tenure of loans to the state-run airline by five years, with repayment now due after 15 years.