Air Taxis: Onward
and Upward

Start-ups seeking to launch aerial taxis have been attracting investors, and some are already on the stock market. Now the entire sector has to follow through—what is needed for these business models to fly?


Porsche Consulting / Clara Philippzig
Vertical mobility: air taxis will be an everyday sight in the not too distant future. Porsche Consulting / Clara Philippzig

Joby Avi­a­tion, Lil­i­um, Volo­copter, Archer, Ver­ti­cal Aero­space, —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.

Takeoff requires an ecosystem

“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.

Three challenges

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.

Cheaper production and better quality: no longer a niche for the wealthy, air taxis (eVTOL) will become a common means of transportation.Porsche Consulting / Clara Philippzig

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.

New infrastructure: more integrated transport networks will be able to serve more than 500,000 passengers a day. Porsche Consulting / Clara Philippzig

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.”

Clearance for takeoff in sight

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.

Destination mass market: experts expect air taxis to cost no more than conventional taxis by 2035.Porsche Consulting / Clara Philippzig

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.”

Expert advice for a successful takeoff

Porsche Consulting commands the expertise and networks to provide comprehensive consulting on vertical mobility to companies and investors. The management consultancy supports the process from developing strategies to putting business models into practice. Aerial taxi makers can use this expertise to make the transition from business case to operations. Investors and vertiport operators can receive answers to questions about selecting the right sites, expanding the charging infrastructure, and connecting with existing transport networks. They also gain insights into urban transportation and operational excellence. In addition, Porsche Consulting can advise travel service providers on exemplary operations and compelling customer experiences, and support them in integrating and networking all modes of transportation.
Companies can explore ways to become high-performance organizations and learn about efficiency programs. For hardware, it pays to consult studies on modularizing industrial goods and optimizing product costs, as well as on the successful formula behind the 911 and on intelligent supplier management. Also recommended are papers on lean production at Airbus and Porsche. Additional studies focus on smart factories, networked supply chains, logistics costs, and purchasing. Also relevant are white papers on predictive asset management and on sizing the aerial taxi market. Insights into service are found in studies on strategy work, new urban mobility, micromobility, and servitization. Further information is also available on service and operational excellence from a customer perspective and the components of a successful service platform. Key topics such as brand acceptance should not be neglected. Questions about infrastructure for vertical mobility are addressed in studies from the automotive industry and the construction industry and in reports on innovative business models following the Covid-19 pandemic. Two more major factors for vertical mobility include airport appeal and stakeholder management in an era of sustainability.
InsightsAir Taxis

An attractive niche area with considerable need for investment.

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