In a little more than 12 months, investors in eVTOL aircraft developers have been led to believe they can start expecting commercial returns to start flowing. However, there are still plenty of question marks over the pace and form that the much-vaunted advanced air mobility (AAM) revolution will take. What is clear is that natural selection is taking its course, meaning that just a handful of frontrunners are now vying to be in the first wave to operate the new aircraft.
At the same time, others are not as fixated on being first to market in 2025 and don’t view 2024 with the same criticality that it has for the likes of Archer, Joby, Volocopter, Lilium, Beta Technologies, and Vertical Aerospace. Airbus, Wisk (owned by Boeing), Jaunt, Eve Air Mobility (majority shareholder: Embraer), Supernal, Overair, and Odys Aviation are among the pioneers willing to take more time to come to market on their own terms, believing that changing air transportation fundamentally is a long-distance race rather than a sprint.
Last week, SMG Consulting released the latest update to its excellent AAM Reality Index. This shows Volocopter in pole position, with the following completing its year-end top ten rankings in descending order: EHang (see below), Joby, Beta, Archer, Wisk, Eve, Vertical Aerospace, Lilium, and Pipistrel/Textron.
SMG’s most current updates are for Lilium, which saw its rating jump up from 6.7 to 7.0 based on reported progress with type certification, and Electra climbing from 5.2 to 5.4 due to an improvement in what the consultants define as technology readiness. SMG also tracks provisional sales agreements for new aircraft and the probability of manufacturers meeting their projected entry into service target dates.
The new index report also shows an uptick in funding for the AAM sector with just over $200 million in fresh capital having gravitated to EHang, Joby, and Beta since SMG’s November update. On December 21, after it was published, Brazil's National Development Bank approved a further finance guarantee worth just over $100 million to Eve via Bradesco Bank to support its carbon reduction efforts.
At the other end of the funding spectrum, XTI Aircraft and Horizon Aircraft are both seeking breakthroughs with Wall Street public offerings achieved through mergers with special purpose acquisition companies. In mid-December, Inpixion shareholders approved a business combination that is expected to lead to an entity called XTI Aerospace trading on the Nasdaq market to fund its TriFan 600 VTOL aircraft. Similarly, Canada-based Horizon hopes to complete its merger/IPO with Pono Capital Three, and in the meantime recently secured C$6.7 million in convertible notes with Canso Investment Counsel.
In a research note published on November 30, SMG partner and AAM practice lead Sergio Cecutta predicted that 2024 will be a critical year for air taxi pioneers. He presents some detailed analysis of the self-declared milestones for three of the front-runners, including program phase durations: Volocopter, Joby, and Archer.
Compressed Schedule Risks
In assessing the risks these OEMs face in getting to market, Cecutta’s common conclusion is that all three are working to extremely compressed schedules for flight testing and entry into service preparations. On this basis, he views Joby as being most likely to get to its projected finish line, followed by Archer and Volocopter.
While certainly mindful of the challenges still facing the AAM sector, Honeywell’s expert David Shilliday told AIN the company remains very bullish on prospects for the market. The avionics, propulsion, and aircraft systems group has carefully selected the programs it is now supporting as a key partner.
“For the impact of AAM to be enduring, it has to be done right, not just in terms of certification, but also in public adoption and infrastructure [preparations], which have lagged a bit,” Shilliday commented. In his view, these latter two areas need to see more intensive focus by companies in 2024 so that momentum won’t be lost when type certification for individual aircraft is achieved.
“Some companies are so laser-focused on type certification, they have left some of this second-order work for later, while some have gone to great lengths to prepare for a future as a mass manufacturer [of aircraft],” Shilliday said. “[For instance], there has to be much more hands-on engagement community by community so that more people appreciate how transformative this will be once you’ve explained the routes it could open up.”
In his view, early adopter cities will engender a sense of "fear of missing out" among visitors who return to their communities with the impression that they are somehow behind the curve when it comes to transportation options. He predicted that cities outside Europe and North America, across the Asia Pacific region and the Gulf, could be setting the pace by creating, “rapidly certifiable corridors” for the new vehicles.
There's More to AAM Than eVTOLs
Beyond eVTOLs, Honeywell views the wider impact of new propulsion and flight control technology as being at least as impactful. Shilliday pointed to a recent spate of provisional sales agreements for new hybrid-electric fixed-wing aircraft with operators such as JSX planning to introduce new regional air services networks based on a double-whammy of lower operating costs and reduced carbon emissions.
There was a time when 2024 was the new 2023 in terms of AAM timelines, but let’s not write off the year just ending without acknowledging the world’s first type certification of an eVTOL aircraft. This was achieved in October when the Civil Aviation Administration of China issued a type certificate to Guangzhou-based, Wall Street-listed EHang for its two-seat EH216-S vehicle.
What made the approval all the more remarkable is that the aircraft will be operated entirely autonomously, something that Western regulators appear to be nowhere close to signing off on for passenger-carrying operations. As of the end of October, EHang was still working to secure the production and airworthiness certificates it needs to progress to series production and the launch of commercial services for applications expected to include tourist sightseeing trips.
There can be no doubt that the Chinese government’s emphatic backing for AAM initiatives, as part of a national plan to stimulate the so-called low-altitude economy of the People’s Republic, has been a factor in EHang’s fast track to certification. But, equally, the highly focused start-up has taken control of its destiny, leveraging the latitude granted by the CAAC to conduct many hours of flight trials. In the final week of December, the company and local partners in Guangzhou and Hefei took passengers on demonstration flights over local parks as they prepare to launch fare-paying services.
EHang Lands First Airworthiness Certificate
On December 21, the CAAC issued EHang with an airworthiness certificate for the EH216-S. This cleared the way for the manufacturer to make its first commercial delivery from its Yunfu factory to aviation technology company Eton, which is a subsidiary of the local government-backed Guangzhou Development District Communications Investment Group. Under the CAAC process, the AC supplements the type certificate issued to EHang in October, allowing some aircraft to be assembled and delivered until the company has secured its full production certificate for series manufacturing.
At Singapore-based consultancy Alton Aviation, Joshua Ng told AIN that, while autonomous flights are ultimately the best path to scaling up AAM, it will take a gradual approach. That’s what he expects to see in China with EHang and other start-ups, including AutoFlight and TCab Tech. “When we think about the crawl-walk-run approach in the context of a centralized [state] like China, the crawl phase will mean a limited certification at first, so we don’t expect thousands of vehicles to start—and there could be quite limited operations before the envelope expands.”
Western rivals remain on a different path, pursuing initial type certifications from both European air safety regulator EASA and the FAA in the U.S. While the eVTOL frontrunners appear to be making solid progress, both agencies have made it clear that reaching their high bars for safety will trump any promises made to investors when it comes to entry into service.
FAA to Industry: Hey, Not So Fast
In August, the comment period closed for the FAA’s proposed Special Federal Aviation Regulation for Integration of Powered Lift: Pilot Certification and Operations. Submissions from industry groups including the General Aviation Manufacturers Association (GAMA) expressed strong concern on four counts, including the following: the basis on which pilots will be certified to fly the new aircraft types; dual controls in the flight deck; flight simulation training devices; and requirements for the energy reserves that electric aircraft will need to have to ensure they can land safely in the event of an emergency.
The latter point on energy reserves is especially critical and could potentially limit the already constrained range of eVTOL aircraft dependent on current battery technology. In recent months, manufacturers like Archer have subtly started underlining not only their maximum range of up to around 100 miles but the fact that most of their flights are expected to be short, urban hops over traffic of just 10 to 20 minutes.
Industry groups are clearly concerned that the FAA’s apparent rethink could compromise efforts to launch AAM operations in the U.S. from 2025, an objective for which the agency has expressed support via its recently published Innovate 28 AAM plan. The confirmation in October of Mike Whitaker as full-time FAA administrator, after a 19-month gap, could sharpen the agency’s focus. It continues to face a mountainous backlog of work and remains compromised by political failure to reach consensus over its long-term funding. Whitaker’s most recent previous job as COO of eVTOL aircraft developer Supernal has raised spirits among the AAM pioneers.
Across the Atlantic, EASA appears to be ahead of the FAA based on the Special Conditions VTOL regulatory foundation, but it can’t be expected to cut any corners to meet the industry’s ambitious timelines. On December 18, the European agency published the latest round of consultation on its means of compliance proposals.
The new year will see an important test case as Germany’s Volocopter seeks to be ready to complete type certification in time to operate the first fare-paying eVTOL rides with its two-seat, piloted VoloCity aircraft during the 2024 Paris Olympic Games, opening on July 26. The plan depends on getting EASA’s sign-off by the end of the second quarter, with Volocopter stepping up flight testing since the summer of 2023 and securing an air operator’s certificate to establish its credentials.
Could Late Regulatory Surprises Spell Trouble?
At Honeywell, David Shilliday takes a sober view of the path to type certification and the potential for regulatory obstacles to rise to the surface in 2024. “I hope there are no late surprises,” he told AIN. He could not rule out some adjustments in requirements and limitations from FAA and EASA in areas such as pilot licensing and training but does not view this prospect as a potential deal-breaker for the new sector of aviation. “[For instance], if there were to be a change in the mission [for eVTOL commercial operations] it would not be back to square one and it wouldn’t bankrupt anyone,” he concluded.
Shilliday and his colleagues are very mindful of the unprecedented scale of the AAM’s type certification needs. “Look at the numbers of aircraft [seeking approval], the FAA and EASA were never staffed to handle that many,” he stated. “But its good that [new FAA administrator] Mike Whitaker comes from this industry [eVTOL developer Supernal] and that [transportation secretary] Pete Buttigieg leans in on future modes of transportation, so this should at least make the path for the second wave [of OEMs] easier.”
While acknowledging the progress that companies are making towards eVTOL type certification, at Alton Aviation Alan Lim is urging clients to “think about the next steps” in 2024. Most notably, they should consider the approach towards achieving mass production, which the likes of Joby and Archer are now doing by establishing production facilities outside high-cost Silicon Valley. He also expects to see more and more partnerships emerging as companies look to join up the dots for the so-called AAM ecosystem and spread the costs associated with these.
Arguably, some of the eVTOL developers who are not fixated on being first to market could stand to benefit from lessons learned from this intense drive towards type certification, series production, and first deliveries. What is clear is that despite the start-up’s insistence that they will deliver unprecedented levels of air transportation safety, regulators—in the West, at least—are not prepared to take their word for it. “Walk the walk, don’t talk the talk,” seems to be an apt New Year’s resolution for the AAM pioneers, who also face plenty of hurdles in establishing the supporting infrastructure required for the new air services, including vertiports and ways to safely integrate the new aircraft into existing airspace.
Shifting Business Models
Increasingly, some observers feel that eVTOL use cases for missions such as logistics and supporting medical services could gain traction more quickly than the much-anticipated air taxi services. Others feel that so-called regional air mobility—in which electric or hybrid-electric fixed-wing eSTOL aircraft open up commercial air services to under-served communities—could come to be prioritized over ferrying people around city centers.
“We’re seeing business models starting to evolve more,” Lim said. “The scheduled airlines are starting to express how they see eVTOLs working, but also business aviation operators are getting involved around applications that could include air medical services and oil and gas [support].”
While viewing initiatives such as the Paris Olympic Games as symbolically significant for the new sector, the Alton team couldn’t rule out more delays to type certification. Lim expressed encouragement that investors have continued to keep putting money into the AAM sector, albeit more selectively than during the SPAC-fueled gold rush that peaked in 2021. “We are not seeing a complete shut out [of investors] from the market despite the technology sector being beaten up by high-interest rates,” he concluded. “The winners are starting to win more; we’re seeing important investments from the military, and some companies saying they don’t want to be first to market, but do want to be the first to scale up.”
