I have travelled on AI several times on domestic India routes (only once on international many years ago) and their service and reliability was fairly decent. Inflight service was better than American carriers and service at the ticket counter was not as good, but not poor either.

However no airline deserves $1 billion in subsidy especially for a developing country such as India, when there are othe pressing needs and there are private carriers such as Jet, Kingfisher, Indigo, Spicejet, etc.. can take AI's place if it where to shut down.

Also in a way this is hindering private air carriers growth and future profitability by subsidizing AI.

AI need not make profits, it can exist as a revenue neutral airline, but losing a billion dollars is something India cannot afford.