An intriguing report issued this week from German airline group Lufthansa poses the question: Are air taxis ready for prime time? Given the company’s semi-detached perspective on a new transportation sector that stands to complement, and to some degree supplant, conventional air transportation, its assessment is refreshingly candid and analytical. It cannot be accused of being a vector for the intoxicating hype engulfing this sector.
In “A Data-driven Report on the State of Air Taxis in 2021,” analysts from the Lufthansa Innovation Hub and Lufthansa Technik look at the potential for passenger-carrying eVTOL aircraft through multiple lenses. They consider media coverage, academic research, investment patterns, and patent filings, and highlight peaks and potential troughs.
For instance, the report shows that venture capital bets in the sector spiked in 2020 with $1.1 billion in disclosed investments for 13 deals at an average of $85.8 million per transaction. This compares with 2019 when the 17 deals logged attracted an average of just $6.6 million (down from $16.9 million in 2018).
Lufthansa notes that two of the eVTOL front runners, Joby Aviation and Lilium, mopped up 85 percent of the available funds in capital-raising exercises that saw them both promoted to the ranks of "unicorns" with corporate valuations going beyond the $1 billion mark.
The report suggests that later-stage investments are now in the ascendancy in this market, implying that the funding gap between the "haves" and the "have nots" is set to become less forgiving. Just today, a leading investor in the sector, speaking on condition of anonymity, told FutureFlight that startups that haven’t raised at least $100 million by the end of 2021 will likely find themselves ejected from the race to market.
“The other hundreds of air taxi startups remain mostly underfunded,” says the Lufthansa team. “On a similar note, we see a shift from early to late-stage investments, indicating the growing investor focus on a handful of likely winners.
“Even though we expect a natural selection process to take place among the existing air taxi startups, we don’t expect to end up in a ‘winner-takes-all’ scenario, given the diverse use cases air taxis could operate in, e.g. intra vs. intercity transport. We assume that likely winners in the air taxi provider race will not only be defined by their capital but also by their breadth of network and partnerships, including but not limited to governments, technology, automotive, and aerospace firms as well as airlines.”
The report says that the buzz around the term “air taxi” in the media peaked in 2019 before dipping in 2020, the year that the Covid pandemic put even the most fervent travelers under house arrest. Lufthansa also tracked social media postings and reported that public sentiment for this new mode of transport climbed gradually from 2015 before rising more steeply in 2017.
The report issues a caution about the importance of not taking public acceptance of urban air mobility for granted. “The momentum in building public trust should continue to be addressed strongly by all relevant stakeholders,” it warns. “A few black sheep can quickly wipe out a leap of faith for an entire industry.”
Another fascinating feature of the report is its Patent Asset Index, which is based on Lufthansa’s assessment of a technology relevance, market coverage, and competitive impact of the contenders. Its data shows that the number of new patent filings peaked in 2018.
However, what will likely get tongues wagging more is a list showing a pecking order of the strongest patent filers among eVTOL aircraft developers. Far and away on top of the deck is China’s EHang with 143, followed by KittyHawk, Boeing, and new entrant Hyundai. Volocopter has 21 and Joby has 20, but Lilium—which the report scores as the second-best-funded startup—has just four. Research for the report concluded at the end of November 2020.
Overall, Lufthansa’s researchers rate Boeing as the technology leader, which is curious given that the troubled aerospace giant has been more than a little ambiguous about its intentions for the sector. The researchers view Joby as the most promising of the numerous precocious startups.
The report wraps up by posing another rhetorical question that it somehow avoids answering: Is the hype justified? Its equivocal answer seems to be something along the lines of, “probably not, but that doesn’t mean to say this won't be a big thing, only not nearly as fast as some would have you believe.”
The Lufthansa soothsayers close with another candid admonishment for this new, and some would say idealistic, industry. This concerns its frequent boasts about how electric aviation is going to save the planet and even make green warrior Greta Thunberg smile.
“The air taxi industry is building its case and ad campaigns oftentimes on arguments around providing a more sustainable transport option in the future, contributing to a reduction in CO2 over time,” says the report. “We seriously question this argument and encourage researchers and professionals to provide scientific evidence on the estimated environmental impact of air taxis over their entire life cycle. That way, the industry can provide a more substantiated basis for discussion on the impact of air taxis on our environment.”
That said, where do the authors see air taxis first filling the skies? Los Angeles, Dallas, Paris, London, or New York, maybe? Wrong: look for early takeoffs in Singapore, China, and the United Arab Emirates, and only on a small-scale basis from the mid-2020s.