How Can Air Taxis Take Off
More Of The Same Thinking Won't Do It
The air taxi market is predicted to be worth $38B within the next five years and the chase is on.
Archer
Archer Aviation is a US Electric Verticle Take-off and Landing (eV TOL) company whose total funding is over $1.5 billion. It has secured $220 million of its latest funding round with a remaining $10 million committed by Stellantis. Stellantis owns many automobile brands including Jeep, Alfa Romeo and Dodge, none of which I have seen flying, yet.
Stellantis will contribute up to $400 million towards scaling Archer’s production of its Midnight eVTOL aircraft. They are aiming for an annual output of 650 units by 2030.
The Midnight aircraft is designed to carry four passengers plus one pilot and can reach speeds of 150 mph and they claim it’s 100X quieter than a helicopter when cruising. So the birds will be happy.
Beta
Beta Technologies the Vermont-based manufacturer has secured FAA approval to commence dual-seat pilot training for its Alia 250 eVTOL aircraft. The FAA’s letter of authorization (LOA) permits student pilots to operate the Alia 250, provided they share controls with one of Beta’s powered-lift test pilots.
The FAA’s proposed regulations for powered-lift aircraft currently require dual flight controls for hands-on pilot training. Industry pressure from eVTOL developers lacking dual control designs is pushing the FAA to reconsider this requirement.
Beta’s six-seat electric aircraft, designed for both passenger and cargo use, will primarily feature dual controls. Exceptions can be made for operators opting for a single-seat configuration.
While non-Beta pilots have tested the company’s fixed-wing electric aircraft, the CX300, the Alia 250 eVTOL prototype has been restricted to Beta’s test pilots. Test pilots from the FAA, military, and Beta’s customers, including UPS, United Therapeutics, and Bristow, have flown the fixed-wing model.
Beta has already launched eVTOL pilot training at its Vermont headquarters and testing facilities in New York.
The company achieved its first piloted transition flights in April. The conventional prototype has completed several cross-country flights in the eastern U.S. over the past few years. Beta’s models have logged over 40,000 nautical miles in testing over the last four years.
EHang
EHang Holdings the Chinese company reported a 9X year-over-year increase in Q2 2024 delivery volume and revenue. The company delivered 49 units of its EHang 216-S eVTOL, generating RMB 102 million ($14M).
EHang holds three certifications for pilotless passenger eVTOLs and has secured over 1,100 bulk pre-orders. These certifications are easier to get in China. EHang expects Q3 revenue of RMB 123 million and targets positive cash flow for 2024. Expansion plans include automating its Yunfu factory and building a new assembly plant in Hefei to add 1,000 units to annual output next year.
The Costs
The hourly operating cost of electric air taxis is determined by; electricity prices, maintenance reserves, and battery replacements. These are expected to be lower than those of traditional helicopters. For example, a R66 helicopter costs over $300 per hour, $89 for routine maintenance, $94 for overhaul parts, and $123 for fuel.
eVTOL aims to cut these costs by over 30%, largely due to the lower cost of electricity compared to aviation fuel and the reduced maintenance requirements of electric motors and batteries versus conventional engines. This prediction is not a guarantee based on the adoption, plummeting sales and weak secondary market for electric cars.
According to Ark Invest who used Blade Helicopter as a reference point, estimate electric air taxis initially will lower the cost of a trip from Manhattan to JFK by 14%, from $500 in a traditional helicopter to $430. As production and the technology scales the total cost of an air taxi ride could drop as low as ~$180 for this trip.
Landing fees are around 40% of the cost of a helicopter ride from Manhattan to JFK. There is an assumption in the research that this will gradually decrease over time due to higher helipad usage and lower setup costs. Airports rarely reduce fees, generally, they increase them as they have a stranglehold on the real estate. This assumption that landing fees will drop appears wrong unless there is local take-off and landing deck competition.
It’s disappointing that many of the published strategies seem to do little more than existing helicopters already do. They may ultimately cost less to manufacture and possibly less to run than helicopters, which are incremental improvements, but are these companies thinking big enough? What is required for mass adoption and therefore profitable operations is for local towns and communities to be part of the eco-system.
Powered-lift regulations are coming this autumn to certify eVTOL aircraft by late 2025, with full operational capacity targeted for the 2028 Los Angeles Olympics.
A National Advanced Air Mobility (AAM) strategy is due for release next year, with manufacturers like Beta Technologies, Joby, Supernal, Ferrovial, and Archer actively involved. The FAA will update its Vertiport Design guidelines this year and issue an Advisory Circular in 2025 but are the right people at the table or are these aircraft manufacturers and airport designers improving their position rather than improving our lives?
NIMBY to YIMBY
Noise has been highlighted as a potential obstacle to the acceptance of electric air taxis, and the NIMBY (not in my backyard) mentality could slow development of the landing infrastructure needed for widespread adoption. Community pushback could slow cost reductions and dampen demand in cities.
Electric air taxi companies are promoting the progress they are making in reducing noise. They are banking that this is enough for communities and they will see the value in embracing this new mode of transportation. But it is not enough, embracing air taxis in low-altitude airspace needs a bigger incentive than, “it’s not that noisy anymore.”
Infrastructure
Having the machine built, tested and certified is one part of the equation. What will allow the industry to grow is what happens with infrastructure. Where the eVTOLs depart and land is what will dictate whether they will be successful or not.
Air taxis need to be used within communities, travelling between towns and from suburb to suburb. Most of these manufacturers and airport owners are using existing helicopter pads and airports. In doing this they are preventing the community from helping build the network of takeoff and landing decks. Taking an Uber to the helipad or vertiport and then being flown to the airport does not expand operations significantly.
There are vast pockets of underutilized real estate looking for yield and large communities of people looking to transit. Growing the market means growing the network and growing the network requires individual private air rights owners.
Taking the narrative away from the niche market of flights from downtown Manhattan to JFK to a wider audience will have significant impacts on society and the company’s business models. This has the added advantage of removing the stranglehold that major airports have on aerial transportation and the associated costs.
The decentralized network of air rights owners will flourish and receive additional income for growing the ecosystem. This supports everything from consent to be in private airspace, to tracking air taxis through an app, building vertiports, refilling stations and maintenance infrastructure.
The reality is, without private air rights owners the business models of air taxis are confined to small short trips to costly and inefficient airports - that will not bring a step change.
Thank you for reading and please share in your networks, your support is appreciated.
