Courtesy of Afshin Molavi’s highly recommended Emerging World Week substack report, a look at India’s growing aviation sector:

The battle for the Indian air traveler just got hotter.

Budget carrier IndiGo — India’s largest airline — announced last week a blockbuster deal to buy 500 narrow body jets from Europe’s Airbus. The multi-billion dollar deal — the largest on record — would outdo another blockbuster Indian aviation deal: Air India’s combined order of 470 jets from Boeing and Airbus.

If you’re doing the math, the latest deal would bring the number of aircraft on order by Indian carriers to roughly 1,615 new planes. In addition to the big buyers — Air India and IndiGo — other carriers have also put in orders for new planes, including SpiceJet, Akasa Air, and Vistara.

These airlines are betting that the world’s fastest growing aviation market still has plenty of room to grow. In 2022, India saw more than 123 million passengers take to the domestic skies and another 43 million fly internationally, according to the Ministry of Civil Aviation’s Annual Report. A graphic published on the Indian newsource Mint, using KPMG and Ficci data, displays the pre-Covid growth view.

Still, even though it has slowed, the Ministry has set an ambitious target for 2014: 1 billion air passengers.

With rising middle classes and a fast-growing economy, more Indians are taking to the skies for domestic and international travel. But to achieve the 1 billion mark, India will need more than just new airplanes. It will need substantial infrastructure investments in airport capacity.

According to reports, India has pledged to spend $12 billion over the next two years to ramp up airport capacity, aiming to boost the number of airports to 220 from the current 148.

Key airports in Delhi and Mumbai are running out of landing slots and foreign carriers are demanding more space. The government of Prime Minister Narendra Modi hopes to see more Indian carriers grow their international links. Of the 43 million international flights, less than half of the passengers flew on domestic carriers.

Emirates Airline — the largest foreign carrier operating flights to and from India — and other Gulf carriers as well as Turkish Airlines play a prominent role in India’s aviation market. While India’s new aviation strategy seeks to grow the market share of domestic carriers vis-a-vis foreign airlines, growth prospects suggest that there will be room for all in the fastest growing aviation market.

Oh, and about those airplanes on order? A slew of supply chain challenges will likely delay delivery, which means that those airlines with capacity today will still have a moat that could last a few more years. Expect more delays in major airports as travel accelerates.