On the first day of the Paris Airshow, Indian low-cost carrier IndiGo placed an order for 500 narrowbody jets with Europe’s Airbus, marking the largest ever purchase of aircraft by a single airline.

The multibillion-dollar agreement surpasses Air India’s earlier this year combined acquisition of 470 aircraft as the country’s two biggest airlines prepare for a strong increase in regional travel demand.

Following months of discussions, IndiGo has placed an order for A320neo-family aircraft, as first noted by Reuters. Before the Le Bourget exhibition, industry insiders claimed that a 500-plane contract was nearly finalised.

“This is just the beginning, there’s more going forward. With the growth of India (and) the growth of the Indian aviation market … this is the right time for us to place this order,” IndiGo Chief Executive Pieter Elbers told a news conference.

Deliveries of the aircraft will take place between 2030 and 2035.

Even while manufacturers are finding it difficult to fulfil output targets, Indian carriers’ efforts to keep up with the world’s fastest-growing aviation market—which serves the largest population—have broken previous records in the sector.

According to a June 1 research by Barclays, Indian carriers now have the second-largest order book, with over 6% of the industry’s backlog, behind only the United States.

However, some analysts are worried that airlines might be acquiring too many jets to compete for the same passengers.

Guillaume Faury, CEO of Airbus, stated after the IndiGo agreement was signed that it was too soon to consider producing more narrowbody aircraft than the anticipated 75 per month.

Due to challenges in restarting production after the pandemic, Airbus’ mid-decade goal has been pushed back to 2026. However, Faury asserted that supply disruption was merely a short-term problem in relation to delivery deadlines starting in the following decade.

Analysts predict that IndiGo has negotiated the right to select any new model or to delay delivery in order to avoid falling behind given Airbus’s announcement that it is considering developing an A320neo replacement between 2035 and 2040.

The continuation of Airbus as IndiGo’s single-aisle jet supplier will enable it to further expand its economies of scale. IndiGo already controls close to 60% of the domestic Indian market. It hasn’t decided which engine supplier will fulfil the most recent order yet, though.

Following problems with the durability of the engines, it switched suppliers from Pratt & Whitney to the GE-Safran joint venture CFM International roughly four years ago.

From earlier orders, IndiGo still has about 480 planes in the Airbus pipeline. Elbers claimed that with the most recent order, the airline’s capacity will double.

According to sources, IndiGo is still in separate discussions with rival Boeing (BA.N) and Airbus over 25 widebody aircraft, which may either be Airbus A330neos or Boeing 787s.

Regarding any upcoming jet purchases, Elbers declined to disclose.

(Adapted from Reuters.com)