Convinced that the way people travel is changing fast and seeking to be ahead of this curve, JetBlue Airways wants to be as close as possible to the change-makers. This desire is a big part of the investment strategy pursued by its JetBlue Ventures division, which has backed advanced air mobility start-ups including eVTOL manufacturer Joby and propulsion pioneer Universal Hydrogen.
The California-based venture capital group takes the view that innovators across the transportation and related hospitality sectors have the potential to breathe new life into a wider travel ecosystem. “Investing in early-stage companies that are changing how all of us travel is good for JetBlue as an airline, and having a lot of investments is about having a seat at the table and being ahead of the game,” JetBlue Ventures president Amy Burr told AIN.
The hope is that the new technology and business models that the company is helping to cultivate will be a force for good not only for JetBlue’s scheduled airline operations, which have recently expanded with new transatlantic services, but also for its wider portfolio, which comes under the group’s Travel Products division, a unit that markets vacation packages as well as hotel bookings and other services such as parking and car rental.
After the unprecedented hardship inflicted on airlines by the Covid-19 pandemic, carriers like JetBlue are only now regaining some sustained momentum, but the public health emergency may yet prove to be a stimulant for progressive change in the travel industry. “Covid gave many companies a moment to ask if we can do things better,” Burr acknowledged. The need to mitigate the risk of infection has resulted in the increased use of contactless technology and processes, which have largely been based on increased digitization.
“Self-service is one of the next big pushes in the travel industry to result in a lower touch [for travelers],” said Burr. This is one of JetBlue Ventures’ priority areas for investment, and so too is environmental sustainability, which she described as a “never going away” trend.
“We [the industry] need to embrace the momentum from Covid and we’ll only solve these problems together,” Burr maintained. “This is why JetBlue is looking at things that are further out, like hydrogen and electric aircraft, and direct air capture to create fuels.” She indicated that the group may place additional bets on the latter technology over the next 12 months with more potentially breakthrough demonstrations anticipated.
Arguably, Joby is one of JetBlue’s most visible investments and what began as a classic West Coast start-up back in 2011 is now a public company, following a merger with special purpose acquisition company Reinvent Technology Partners and a New York Stock Exchange listing. “Back in 2017, we looked at the eVTOL space and considered how all the many competitors were doing, and it seemed clear that Joby had the right mindset, was making the best progress, and was ahead and really engaged, early on, with the FAA,” said Burr.
The company is not the only airline to have seen the potential for eVTOL aircraft being developed to carry small groups of passengers on routes ranging from as short as 25 miles to up to around 150 miles. Earlier this year, United Airlines and its regional partner Mesa placed a provisional commitment to buy up to 200 of Archer's new aircraft. The U.S. carrier is also investing in Sweden's Heart Aerospace and its plans to build a 19-seat all-electric regional airliner.
Meanwhile, American Airlines has made a direct investment in UK-based eVTOL developer Vertical Aerospace. Along with Virgin Atlantic Airways, Japan Airlines, Brazil's Gol and leasing group Avolon has agreed to buy more than 1,300 of the UK start-up's four-passenger VA-X4 model.
As any venture capitalist would expect, not all of JetBlue’s bets have paid off. For instance, in early 2019, along with Boeing, JetBlue felt compelled to withdraw support from Zunum Aero, which had been attempting to bring a 12-seat hybrid-electric airliner called the ZA-10 to market by 2022, with longer-term plans for a 48-seater. “If you’ve never had a company fail, you may not be taking enough risk,” reflected Burr.
But if JetBlue’s investment appetite is for the early stages of a start-up’s journey, what happens when, like Joby, they appear to be ready for the major leagues? “When considering when we might get off as an investor [i.e., sell an equity stake], we consider it on a situation-by- situation basis,” Burr explained. “In some cases, we could keep the shares and the stake, and we can do a hybrid version of that, and even if we don’t invest in later [funding] rounds, it doesn’t mean we don’t still support them. SPACs are a good option for some start-ups because they need a lot of capital to get to where they can launch their business.”
As a strategic investor, JetBlue Ventures appears to take a patient view on return-on-investment timelines, but it's convinced that the new technologies will drive fresh revenue streams in the travel industry. “We believe that in a couple of years, eVTOL [air taxi] services will be an option for travelers,” Burr said, adding that JetBlue Airways expects some of its passengers to arrive at airports for scheduled flights this way. The company also sees hybrid-electric, all-electric, and hydrogen gradually being applied to smaller regional aircraft, making shorter sectors both more economic and less environmentally damaging.
This story is from FutureFlight.aero, a news and information resource developed by AIN to provide objective, independent coverage and analysis of cutting-edge aviation technology, including electric aircraft developments and advanced air mobility.