Europe's Airbus (AIR.PA) secured a historic deal on Monday involving the most jets ever bought by a single airline, with an order for 500 narrowbody jets from Indian budget carrier IndiGo (INGL.NS) on the opening day of the Paris Airshow.
The multibillion-dollar deal eclipses Air India's combined purchase of 470 jets earlier this year as India's two largest carriers plan for a sharp expansion in regional travel demand.
IndiGo's order for A320neo-family jets follows months of negotiations first reported by Reuters. Industry sources said in advance of the Le Bourget event that a 500-plane deal was close.
"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.
The aircraft will be delivered between 2030 and 2035.
Efforts by Indian carriers to keep pace with the world's fastest-growing aviation market, serving the largest population, have sent industry records tumbling even though manufacturers are struggling to meet output goals.
Indian carriers now have the second-largest order book, with an over 6% share of the industry backlog, behind only the United States, according to a June 1 report by Barclays.
But some analysts have expressed concern that airlines could be over-ordering jets in pursuit of the same passengers.
After signing the IndiGo deal, Airbus CEO Guillaume Faury said it was premature to start thinking about narrowbody jet production rates higher than the planned 75 per month.
Airbus has faced problems in rebuilding production after the pandemic and has pushed back the mid-decade target to 2026, but Faury said supply disruption was a relatively short-term issue compared with the delivery schedules starting next decade.
Airbus has said it is considering developing a successor to the A320neo between 2035 and 2040, meaning IndiGo is likely to have negotiated the option to switch to any new model or cancel late deliveries rather than be leapfrogged, analysts said.
IndiGo, which accounts for nearly 60% of the Indian domestic market, is keeping Airbus as its supplier of single-aisle jets to squeeze out further economies of scale. But it has not yet decided which engine supplier to use for the latest order.
It switched supplier from Pratt & Whitney (RTX.N) to GE-Safran (GE.N)(SAF.PA) venture CFM International about four years ago following issues with engines' durability.
IndiGo still has almost 480 jets left in the Airbus pipeline from previous orders. Elbers said the latest order would allow the airline to double in size.
IndiGo continues to hold separate talks with Airbus and rival Boeing (BA.N) for 25 widebody planes, which could either be Airbus A330neos or Boeing 787 jets, sources have said.
Elbers declined to comment on any further plane orders.
