Air Taxis: Onward
and Upward

Joby Avi­a­tion, Lil­i­um, Volo­copter, Archer, Ver­ti­cal Aero­space, Electra.aero —the list of com­pa­nies that have raised bil­lions of dol­lars to make air taxis with elec­tric dri­ves wide­ly avail­able to the pub­lic as a means of trans­porta­tion has length­ened con­tin­u­ous­ly in 2021. Around 100 man­u­fac­tur­ers world­wide have entered the race to present the first func­tion­ing busi­ness model. Com­mon to all is the vision of reliev­ing the pres­sure on traf­fic hubs. How? By mak­ing zero-emis­sion air taxis as easy to book as reg­u­lar taxis on the streets today.

The young com­pa­nies have acquired the req­ui­site seed cap­i­tal from tra­di­tion­al invest­ment rounds with ven­ture cap­i­tal­ists, pri­vate equi­ty firms, and strate­gic investors. Estab­lished part­ners like Amer­i­can Air­lines and car mak­ers like Toy­ota (Japan) und Geely (China) have joined in. Stock mar­ket launch­es have led to the biggest head­lines, with spe­cial pur­pose acqui­si­tion com­pa­nies (SPACs) rais­ing invest­ment cap­i­tal for the young enter­pris­es. In the first three quar­ters of 2021 alone, around six bil­lion US dol­lars have flowed into the accounts of air taxi man­u­fac­tur­ers. Count­ing the invest­ments since 2015, the sec­tor has suc­ceed­ed in rais­ing near­ly seven bil­lion dollars.

“For ver­ti­cal mobil­i­ty to suc­ceed, the buildup on finan­cial mar­kets will have to yield con­crete steps by 2025,” says Gre­gor Grandl, Senior Part­ner at Porsche Con­sult­ing. In a study enti­tled The Eco­nom­ics of Ver­ti­cal Mobil­i­ty, he ana­lyzed the pro­gres­sion to prof­itabil­i­ty and sketched a step-by-step route to imple­men­ta­tion. The tra­jec­to­ry begins with the first com­mer­cial flights expect­ed in the mid-2020s. His con­clu­sion: for short to medi­um dis­tances of 20 or more kilo­me­ters, elec­tric pas­sen­ger drones could def­i­nite­ly be a rel­e­vant play­er. For that to hap­pen, the entire ecosys­tem of hard­ware, infra­struc­ture, and ser­vices needs to move swift­ly from proof of con­cept to actu­al operations.

“Con­grat­u­la­tions to all who have come this far and com­plet­ed their financ­ing rounds,” says Grandl. “Now they need to fol­low through and make it past a cer­tain vale of tears. Only then can ver­ti­cal mobil­i­ty make good on its high-alti­tude promis­es and become an inte­gral part of future trans­porta­tion networks.”

The poten­tial to estab­lish a new and sus­tain­able means of trans­porta­tion over the next 15 years is cer­tain­ly present. Accord­ing to the above study by Porsche Con­sult­ing, the mar­ket for ver­ti­cal mobil­i­ty will be worth around 32 bil­lion dol­lars by the year 2035. But this will require invest­ing at least 20 bil­lion dol­lars. In order for the first routes to be flown by the mid­dle of this decade, the eVTOL (elec­tric ver­ti­cal take­off and land­ing) air­craft mak­ers will have to invest five to ten bil­lion dol­lars in devel­op­ment. Fur­ther sums will need to be invest­ed by infra­struc­ture and ser­vice providers. More­over, as the study notes, it is unclear whether the req­ui­site reg­u­la­to­ry frame­works and infra­struc­ture will be in place by then.

The first press­ing task con­sists of devel­op­ing reli­able hard­ware and obtain­ing autho­riza­tion for use. “We’re cur­rent­ly see­ing a race for both strate­gies and autho­riza­tions, where only five or ten of the more than 100 con­tes­tants will arrive at the fin­ish line,” observes Grandl. “Sev­er­al strate­gies are already out ahead. Man­u­fac­tur­ers now have to show they’re tech­no­log­i­cal­ly fea­si­ble. They also and espe­cial­ly have to con­vinc­ing­ly demon­strate that this new means of trans­porta­tion can make money.”

Fur­ther devel­op­ment of air-taxi tech­nol­o­gy is close­ly linked to accep­tance on the part of the pub­lic. The sec­tor can only be suc­cess­ful if it can present sound argu­ments to allay con­cerns. This applies espe­cial­ly to oper­a­tional safe­ty, air-taxi use—and the envi­ron­men­tal impact of fac­tors like noise emis­sions from rotors.

The sec­ond imme­di­ate chal­lenge lies in turn­ing the start-ups into pro­fes­sion­al com­pa­nies, or “high-per­for­mance orga­ni­za­tions,” as Grandl calls them. Key con­sid­er­a­tions here include con­trol­ling costs while also keep­ing hard­ware costs down, work­ing rapid­ly and effi­cient­ly, build­ing com­pa­ny-spe­cif­ic pro­duc­tion net­works, and lay­ing the ground­work for ser­vices such as repair­ing and rehaul­ing the aer­i­al taxi fleets.

Based on the study’s exten­sive cal­cu­la­tions, which eval­u­ate three dif­fer­ent sce­nar­ios in detail, an esti­mat­ed 15,000 air taxis will be oper­at­ing world­wide by 2035, although indi­vid­ual mak­ers will not be pro­duc­ing more than 1,000 of these small air­craft a year. “Because of the low vol­umes, each man­u­fac­tur­er will only be able to oper­ate prof­itably at a sin­gle loca­tion world­wide,” explains Grandl. “The sites will have to serve sup­pli­ers and buy­ers, which will pose unusu­al­ly high chal­lenges for sup­ply chains.” In con­trast to com­mer­cial jets, which are flown to cen­tral loca­tions for large-scale repairs and rehauls, eVTOL main­te­nance will have to be done region­al­ly. This means providers will need to estab­lish their own work­shops in every region where they are active.

The third chal­lenge extends beyond the realm of hard­ware man­u­fac­tur­ers. It con­sists of enhanc­ing the appeal of ver­ti­cal mobil­i­ty by rapid­ly set­ting up com­plete ecosys­tems in col­lab­o­ra­tion with trans­port and other ser­vice providers. For the sec­tor to assume a rel­e­vant share of the mar­ket by 2035, the study expects it to need at least half a mil­lion pas­sen­gers a day and 1,000 to 2,500 take­off and land­ing sites in up to 60 suit­able cities worldwide.

Final­ly, for the new air­craft to get off the ground and gen­er­ate sales, two gen­er­al con­di­tions need to be ful­filled. For one thing, charg­ing sta­tions and other infra­struc­ture for the take­off and land­ing sites—known as vertiports—have to be built. And not least of all, the ini­tial routes need to be autho­rized. If these con­di­tions are not met quick­ly enough, man­u­fac­tur­ers will require more cap­i­tal and there­by risk tax­ing their investors’ patience. The more con­crete the plans become, the more trans­paren­cy is need­ed. As Grandl notes, “Com­pa­nies that have made their ini­tial pub­lic offer­ings are sub­ject to greater dis­clo­sure oblig­a­tions than other start-ups.”

Rel­e­vant play­ers in the hard­ware, infra­struc­ture, and ser­vice sec­tors have to devel­op strong strate­gies for when they enter which mar­kets. In other words, they need to bal­ance region­al pres­ence with inter­na­tion­al­iza­tion. Loca­tions like Hong Kong and Los Ange­les have already joined with com­mer­cial part­ners like Volo­copter to explore how air taxis can be inte­grat­ed into exist­ing trans­porta­tion sys­tems. For this to suc­ceed, oper­a­tional exper­tise and pow­er­ful cus­tomer expe­ri­ences are crucial—from stream­lined book­ing and dis­patch­ing process­es to prompt main­te­nance. On a par­al­lel track, the charg­ing infra­struc­ture needs to be quick­ly expand­ed and ver­ti­port con­struc­tion accel­er­at­ed by, e.g., mod­u­lar process­es. Future ver­ti­port oper­a­tors will also have to devel­op inno­v­a­tive busi­ness mod­els for incor­po­rat­ing retail and food busi­ness­es and for inte­grat­ing aer­i­al taxis with other means of transportation.

A large amount and wide range of work remains to be done. How­ev­er, Porsche Con­sult­ing’s study con­cludes that elec­tric air taxis can become a worth­while and future-ori­ent­ed addi­tion to exist­ing trans­porta­tion sys­tems, an option that is both entic­ing and afford­able to large seg­ments of the pop­u­la­tion. “Ver­ti­cal mobil­i­ty will devel­op step­wise instead of expo­nen­tial­ly,” pre­dicts Grandl. The expert is con­vinced that “air taxis will be cleared to fly.”