Rescue teams had recovered 127 bodies at the wreckage site outside Mangalore International Airport by mid-afternoon, Air India Director Anup Srivastava told CNN.
Eight of the 166 people onboard Air India Flight IX-812 survived the crash and were taken to hospitals, he said.
Survivors told CNN's sister network that they jumped out of the plane after it crashed, seconds before it burst into flames.
Rescue workers struggled to reach the crash site in a hilly wooded area beyond the runway, the network said. Smoke from the plane also hampered rescue efforts, CNN-IBN reported.
Abhay Pathak, a regional manager for Air India based in Dubai, said there were 160 passengers on board the plane and six crew members.
Of the passengers, 32 were women, 105 were men, 19 were children and four were infants, he said.
Indian Prime Minister Manmohan Singh announced financial aid for the victims Saturday and canceled scheduled events at his residence to mark the end of his first year in office.
The government said families would receive 200,000 rupees, or about $4,260, for each dead passenger and 50,000 rupees, or $1,064, for every injured passenger.
The airline has offered relatives of crash victims in the United Arab Emirates free passage to India, Pathak said, and about 20 people have accepted the offer.
Srivastava said India Air was investigating the crash and trying to confirm casualties.
The pilot did not report any problems before landing the plane, the civil aviation ministry said.
The Mangalore airport reported calm wind, no rain and a visibility of 6 km at the time of the crash, the ministry said.
Boeing released a statement saying the company would send a team to provide technical assistance to Indian authorities during their investigation.
The 8,000-foot runway at Mangalore's airport opened in 2006, and officials say it has an end-safety area of about 90 meters.
Air India has released the following telephone numbers to learn more information about the crash:
General: +91 2560 3101 +91 2565 6196
In Mangalore: 0824 222 0422
Dubai (Air India Express): 00971 4 2165828/29
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