RHEL AI installation failed with error "ostree container image deploy --sysroot=/mnt/sysimage --image=/run/install/repo/container --transport=oci --no-signature-verification' exited with the code 1."

Issue

Installation of RHEL AI on baremetal server with supported hardware and enough disk space failed with following error:

The following error occurred while installing the payload. This is a fatal error and installation will be aborted.
The command 'ostree container image deploy --sysroot=/mnt/sysimage --image=/run/install/repo/container --transport=oci --no-signature-verification' exited with the code 1.

The downloaded installation ISO file checksum matches the official one provided on download site but installation fails.