The advanced air mobility (AAM) pioneers that have made ambitious pledges to investors that revenues from eVTOL aircraft will start flowing by 2025 have a mountain to climb. With financial markets now rattled by factors such as global political instability, the steepest part of the ascent is now being undertaken with some players running low on capital just as they face the highest rates of expenditure.
According to a new analysis from Alton Aviation Consultancy, in addition to the obvious challenges related to getting the vehicles certified, companies must also now turn their attention to scaling up manufacturing capability from almost a standing start. Joshua Ng, a director with the group, told FutureFlight that he and his colleagues are working with multiple manufacturers, as well as with aircraft operators and airports, to help them achieve the key milestones that are fast approaching in what he refers to as “the twilight zone” that precedes entry into service and the start of commercialization.
But this is just one item in a list of what Alton, which has offices in New York, Dublin, Dubai, Hong Kong, Beijing, Singapore, and Tokyo, calls the "need to believe" factors that will determine whether AAM proves it is capable of delivering on its promises.
Analyzing the ratios between existing capital reserves and the rate at which cash is being burned through to get to market entry, Alton sees significant differences in the relative strength of competitors. In a report released in April called Drafting the 4th Aviation Revolution, the consultancy rates Eve, Joby, and Archer as being in relatively strong positions, with the likes of Lilium, Vertical Aerospace, and EHang having lower reserves in the tank.
Market Consolidation Is Coming Soon
In Alton's view, the extraordinarily packed field of AAM contenders is likely to thin out in the coming months. A wave of consolidation is expected as stronger businesses cherry-pick the assets and expertise of those with insufficient capital to stand alone and some of the weaker also-rans disappear altogether. One critical factor, according to a report that Ng presented at the recent Revolution.Aero conference in Dublin will be the ability of eVTOL manufacturers to convince prospective customers to take the plunge by converting relatively loose memorandum-of-understanding agreements into confirmed orders backed by pre-delivery payments that could bridge financial gaps at this critical phase.
Other key drivers of progress at this point will be an increased opportunity for leasing companies to enter the AAM market. However, this trend will gain momentum, according to Alton’s analysts, only “once asset liquidity, proven useful lives, and known residual value profiles become known.” During the Revolution.Aero event, several leading lessors were pressed on all three of these points and confessed that the specifics remain unconfirmed for now.
Alton sees cargo applications for the new vehicles to be among the first use cases, with early passenger flights mainly being focused on providing connections between airports and city centers. The company anticipates new charter flight providers to enter an AAM space in which, for now, airliners account for around one-third of all provisional sales commitments for the eVTOL aircraft. That said, it feels that major carriers will likely depend on their smaller regional partners to operate the new vehicles as part of their wider service networks.
In the run-up to the long-promised year-zero for electric air taxis and other exciting new business models, the Alton team says, there is an urgent need for the concept of operations connecting airspace integration, ground infrastructure, and the vehicles themselves to be rigorously tested before entry into service. This could be challenging, given that some key aspects have yet to be fully defined and confirmed by regulators.
Other critical elements of the plan for AAM services that need firming up with increasing urgency include landing infrastructure at airports and in the communities that eVTOL vehicles will serve. Alton also advocates that manufacturers supplement their own plans for product and customer support by forging alliances with specialist maintenance, repair, and overhaul service providers that will prove to be key elements in the supply chain, but only if they start work on this approach before much more time has passed.
Has Anyone Asked You Whether You Want Advanced Air Mobility?
However, beyond all of these complex considerations, Alton sees one more “need to believe” factor in determining whether AAM will fulfill its promise in the near term, and that is whether the public will sufficiently accept the new vehicles and service models. A key challenge here could be that relatively little effort has been expended to determine whether the people who it is casually assumed, with breathless anticipation, will download eVTOL air taxi booking apps on their phones actually care that much about what is being promised. Getting city mayors on board is one thing, but getting millions of people to feel invested in the new mode of transportation could be quite another.