Navigating the 2024 Advanced Air Mobility (AAM) landscape

Disclaimer: The first version of this article was published in February 2024 and has since evolved as we analyzed the State of the AAM industry across eight key dimensions. The final extension was completed on December 13, 2024, and this article will no longer be updated.

For deeper insights and access to additional data, connect directly with our AAM industry analysts. Book a slot right here.

No topic has arguably sparked more imagination and media buzz in the world of Travel and Mobility Tech over the past ten years than air taxis, also known as eVTOLs, eSTOLs, or eCTOL, depending on the respective aircraft type and use case in mind.

We at the Lufthansa Innovation Hub have long closely followed every development in the emerging Advanced Air Mobility (AAM) sector. In 2021, this culminated in producing major research reports like: 

• Our flagship eVTOL patent analysis,

• a comprehensive visual mapping of the entire AAM ecosystem,

• and an interactive dashboard tracking every venture capital dollar being invested in AAM companies around the world.

Since then, our research focus on AAM has slowed down a bit given slower funding dynamics since 2022, but as we fully edge into 2024, our outlook on the AAM market is becoming more optimistic again.

The AAM Revival: Four Signs of Takeoff

There were essentially four major developments in the AAM sector in recent months that have reignited our research interest and convinced us that it’s time to dive deep into this market once again. 

1. Joby Aviation’s Certification Milestone: Joby Aviation has recently achieved a significant leap in the Federal Aviation Administration’s certification process, completing the second of five stages. This critical progress signals Joby’s steady path toward potentially introducing air taxi services by as early as next year.

2. Major Strategic Alliances Are Forming: The end of 2023 and the start of 2024 brought exciting partnership announcements from eVTOL innovator Lilium. Collaborations with our parent company Lufthansa Group and Frankfurt Airport spotlight the growing interest and potential groundwork being laid for eVTOL operations in one of the world’s pivotal markets, indicating serious intentions toward operational readiness and infrastructural support.

3. Historic Debut Flight in NYC: Joby Aviation’s successful execution of New York City’s inaugural electric air taxi flight on November 12, 2023, stands as a landmark event. Taking off from Manhattan’s Downtown Heliport, this was not only a first for the city but also showcased the Joby S.4’s capability in an urban environment, paralleled by Volocopter’s similar feat, illustrating a significant step toward urban air mobility.

4. Ehang’s Regulatory Triumph: At the tail end of 2023, Ehang emerged as the first AAM company globally to receive a Type Certificate for its EH216-S model from the Civil Aviation Administration of China. This certification for its unmanned eVTOL aircraft paves the way for Ehang to embark on passenger-carrying commercial operations next.

Motivated and inspired by these events, we’re excited to launch an extensive research series into the AAM landscape which will last for at least the next six months, starting today!

Our goal? 

To truly analyze the state of AAM in 2024, meaning decoding the sector’s readiness for commercial eVTOL operations and pinpointing areas that still need further development for the industry to truly take off. 

To achieve this, we crafted a new research product that we coined the Advanced Air Mobility Readiness Radar. 

It’s a comprehensive yet pragmatic framework designed to evaluate the industry across multiple dimensions. 

Unveiling the AAM Market Readiness Radar

The AAM Market Readiness Radar emerges as a straightforward tool for visualizing the journey toward the commercial viability of the AAM sector. This spider mapping instrument scrutinizes the essential factors crucial for the AAM industry’s success, particularly focusing on the transition from prototyping to commercialization.

• The tool is structured around eight key dimensions, each a critical pillar in assessing the industry’s preparedness for launching commercial AAM services in the future. 

• These dimensions are evaluated on a scale from 1 (indicating areas needing significant work) to 5 (signifying readiness for commercial operations). 

Here is what this looks like:

Let’s briefly define each dimension for more context:

Technology: This dimension is the backbone of AAM, spotlighting advancements in aircraft design, propulsion systems, avionics, and autonomous technologies necessary for AAM’s success.

Funding: This category assesses the financial stability and strategy of AAM startups, crucial for securing long-term viability through various funding avenues, including venture capital, corporate investments, or public offerings.

Regulation: This area navigates through the complex regulatory landscape, ensuring that AAM innovations align with safety standards and obtain the requisite certifications from authorities like the EASA, FAA, and CAAC.

Scalability: Focusing on the operational readiness of AAM services, this dimension evaluates production capacity, supply chain management, fleet operations, and the infrastructural foundation necessary for scaling AAM operations.

Ecosystem: This variable centers on cultivating the infrastructural and community ecosystem essential for AAM, including vertiports, maintenance facilities, air traffic management, as well as ground mobility integration.

Business Model: This dimension delves into developing sustainable business models and identifying strategic routes and use cases that can effectively market AAM technologies and ensure commercial viability.

Sustainability: Highlighting the environmental ethos of AAM, this area emphasizes eco-friendly technology development, emission and noise reduction, and the overall environmental impact of AAM services.

Public Desirability: The final category gauges public acceptance and enthusiasm for AAM, underscoring the importance of building public trust, securing community support, and aligning with stakeholders and city officials for successful AAM deployment.

AAM Readiness: Charting the Path Forward

Over the next few weeks and months, we’ll dissect each of the eight dimensions that determine the sector’s readiness for commercialization, based on the current landscape in 2024.

This evaluation aims to offer a comprehensive understanding of the industry’s progression and its readiness to transform urban and regional air mobility into a commercial reality.

Without further ado, let’s start with the first dimension: the technological backbone of the AAM sector.

In simple words, we’re diving deep into R&D progress, scrutinizing how far technology has evolved, especially when drawing comparisons with past years.

(1/8) The State of Technology

This approach is supported by numerous scientific studies highlighting patents as a reliable barometer for gauging the intensity and direction of technological innovation within any field.

In our journey to dissect the current technological landscape of Advanced Air Mobility, we embraced a familiar yet potent analytical approach: the study of patents, similar to our 2023 patent analysis of the airline industry. 

Recognizing their importance, we delved into the patent filings of all major AAM contenders, drawing on our history of employing data-driven research methods to surface trends and insights.

Patent Activity: Signs of Exponential AAM Innovation 

Delving into the patent filings within the Advanced Air Mobility sector reveals an intriguing narrative of innovation and ambition. 

• Over the last 14 years, the AAM industry has mostly shown a steady and linear increase in patent activity.

• However, in the past two years, the sector has gone through a remarkable surge.

• In 2023 alone, the industry hit a milestone with an unprecedented 760 patent filings, setting a new record.

This massive surge in patent filings serves as a strong indicator of the AAM sector’s accelerated phase of innovation, unlike anything we’ve observed previously. 

This development is not just noteworthy; it’s a sign of promise, aligning with our assessment that the industry is currently gaining momentum at an unparalleled pace.

The interpretation of this dramatic increase in patent filings is clear: 

• AAM companies are eagerly safeguarding their R&D breakthroughs. 

• This rush to patent filing is a testament to the sector’s technological advancements and a signal that the industry is moving closer to the reality of commercial AAM operations. 

• As companies increasingly protect their intellectual property, it also underscores the growing competitive landscape of the AAM sector and the critical importance of securing a potential technological leading edge.

The race toward commercialization seems to be heating up, but let us further dive into where most of this patent filing activity is coming from.

Unpacking the Geographical Innovation Hubs

The recent explosion in patent filings across the AAM sector unveils intriguing geographical trends that spotlight the regions driving the most innovation. The data since 2022 underscores a significant concentration of innovation efforts.

As the chart illustrates, the United States accounted for an overwhelming majority of patent filings. 

• In 2022, 60% of all AAM patents originated from the U.S., a figure that impressively climbed to 71% by 2023. 

• This increase not only emphasizes the U.S.’s leading role but also its expanding influence in the AAM domain.

On the contrary, China, while holding the second spot in terms of patent filings, saw its share halve from 16% in 2022 to just 8% in 2023. Europe, despite its rich aerospace heritage and the European Union Aviation Safety Agency’s (EASA) encouraging regulatory framework, also saw a decline, contributing to only 7% of the total patents filed in 2023.

This distribution highlights the U.S.’s increasingly dominant position in AAM technology. The dominance of the U.S. is not merely a reflection of its innovative capacity. 

• There are also a larger number of AAM companies based in the country that benefit from a robust ecosystem of venture capital that is eager to invest in breakthrough technologies. 

• Furthermore, a forward-thinking regulatory stance by U.S. authorities contributes to an environment conducive to rapid technological development and experimentation. 

In contrast, Europe and China face more challenging economic conditions that have recently underperformed against expectations. Such economic headwinds have arguably led to a more cautious investment approach, potentially slowing down the pace of innovation and patenting activities among their AAM players.

Given this, the current trajectory suggests that the most groundbreaking technological advancements and collaborative opportunities in AAM are likely to emerge from the U.S. 

Three U.S. Companies Lead in AAM Patent Filings

The dominance of the United States in the AAM sector is further underscored when examining the companies that are most active in patent filings. 

Leading the charge are the U.S.-based companies Joby Aviation, Wisk Aero, and Beta Air. Together, they not only top the list of AAM entities with the highest number of patents filed over the last 15 years but have also shown remarkable activity in the last two years. 

• Notably, Beta Air has been particularly prolific in 2023, filing more patents than any other company within a single year.

• Patent leader Joby Aviation, on the other hand, experienced a slight slowdown in its patent growth in 2023 compared to its historical performance.

The ranking reveals further interesting takeaways:

1. Traditional industrial giants like Honeywell are also actively engaging in AAM innovation alongside dedicated AAM firms. This diversity underscores the wide-reaching interest and potential impact of AAM across various sectors, including automotive and technology.

2. Lilium, ranking fifth and representing the forefront of European AAM innovation, significantly expanded its patent portfolio in 2023. This growth signals that European companies also possess the potential to develop substantial technological foundations in AAM.

3. The increasing accumulation of patents within the sector suggests rising barriers to entry for newcomers, potentially concentrating future innovation among current market leaders. 

Especially the latter insight underscores the growing significance of strategic alliances within the AAM sector. Emerging or smaller companies are likely to seek collaborations with established patent holders to leverage their essential technologies and avoid infringement issues. A prime example of this dynamic is the legal and subsequent collaborative relationship between Archer and Wisk Aero, a company with deep ties to Boeing. 

• In 2021, Wisk sued Archer for patent infringement, highlighting the competitive nature of technology development in the AAM space. 

• However, by 2023, the two companies had not only settled their lawsuit but also agreed to collaborate on specific technological areas, such as autonomy. 

• This collaboration was further solidified by Boeing’s decision to invest in Archer after having more or less taken over the ownership of Wisk. 

This turn of events illustrates the complex interplay between competition and cooperation in the AAM sector, where yesterday’s rivals can become today’s partners in a bid to accelerate technological advancements and market readiness.

Leading Innovation Areas in AAM

With a clearer picture of who the leading technology innovators are within the AAM sector, our attention now shifts towards the specific domains where these innovations are concentrated. 

Analyzing the categorization of patents filed within the last two years sheds light on the technology areas most ripe for advancement in future eVTOL vehicles.

As the chart illustrates, the category known as “Power and Magic Movers,” predominantly focused on propulsion and energy systems, leads not just in the volume of patent filings for both 2022 and 2023 but also showcases the most significant uptick in intellectual property (IP) activities.  

• The relentless pursuit of advancements in this area is driven by a fundamental industry mandate: without the development of electric propulsion technology that is not only efficient and quiet but also capable of achieving meaningful range, the vision of air taxis and their transformative impact on urban and regional connectivity simply cannot materialize. 

• Given that the range of most eVTOL prototypes currently falls short of supporting any realistic longer-distance connections, such as intercity flights, the surge in patent filings here signals a strong push toward extending flight capabilities. In other words, it is a direct response to this critical bottleneck.

• Companies like Joby Aviation and Beta Technologies are at the forefront of addressing these challenges. This is crucial given that recent test flights have underscored the difficulty of extending range and flight time while maintaining power stability throughout the flight.

• Moreover, as urban areas are particularly sensitive to noise pollution, the push for quieter propulsion systems is also a direct response to one of the most significant barriers to public and regulatory acceptance of eVTOLs. High-profile tests conducted by companies such as Joby and Volocopter in densely populated cities like New York City, Paris, and Rome aim to demonstrate their aircraft’s ability to operate with minimal noise impact, an essential step toward gaining widespread acceptance.

• Lastly, the commercial viability of these aircraft hinges not only on their efficiency and range but also on the ability to quickly recharge or swap energy sources. Beta Technologies is pioneering in this area by developing a comprehensive charging network. Their efforts include partnerships with competitors like Archer Aviation, indicating a collaborative approach to overcoming one of the industry’s most pressing challenges. 

Looking beyond propulsion and energy systems, the second most notable growth in patent filings is observed in the realm of “Flying Machines.” 

• This cluster relates to the technology enabling the aircraft to perform its primary function—fly. 

• Innovations in this category are crucial for improving flight stability, control systems, and overall airworthiness, making it a fundamental focus area for AAM companies aiming to enhance the safety and reliability of future air taxis. 

• Notably, Beta Technologies stands out for its leadership in innovation efforts, particularly in the domain of in-flight stabilization. 

The other areas of innovation, such as “Eco-Friendly Flyers” focusing on sustainability measures to minimize emissions, and “Core Aeronautic Technology” covering the essential elements of aircraft design and function, have maintained a consistent level of patent activity. 

This consistency suggests that while these areas remain critical components of AAM technology development, they have not seen the same level of accelerated innovation as propulsion and flight control systems.

Scoring the AAM Technology Dimension

Reflecting on the diverse facets of patent activity within the AAM sector, it’s evident that the Technology Dimension has seen significant progress in 2024 compared to the previous year. 

This advancement is underscored by a notable increase in overall patent filings, a clear regional focus with the United States leading the charge, and a concentrated effort from a select group of AAM pioneers.

The surge in patent activity, especially in the realm of propulsion technology, indicates a push towards extending the operational range of eVTOLs and maintaining power stability in-flight. This is a pivotal development, as enhancing travel distances directly impacts the feasibility of AAM services, creating viable business cases that (hopefully) offer real-time savings for passengers opting for air taxis over traditional ground transportation.

However, it’s also apparent that certain critical areas may require further attention and development. 

• Notably, the relatively lower focus on safety and maintenance technologies might raise questions about long-term operational viability and passenger trust. However, it is important to note that despite comparatively lower patent activity, significant y-o-y growth in this area indicates a growing industry focus on safety. Collaborations and technology sourcing from aerospace veterans like Honeywell, which provides avionics to companies such as Lilium, underscore this commitment, even though it is not reflected in patent filing. Given the current landscape, the pursuit of a universally accepted safety standard for eVTOLs and other new air taxi models remains a work in progress. The European Union Aviation Safety Agency (EASA) is inclined towards adopting the stringent “10-9” safety standard, which would permit only one catastrophic failure per billion flight hours. Meanwhile, the US Federal Aviation Administration (FAA) is considering a more flexible approach. This variation underscores the ongoing dialogue and efforts within the industry to balance innovation with the imperative of safety.

• Another current white spot that rightfully raises some serious questions is the lack of emphasis on customer-facing digital innovations, such as the seamless integration of AAM services with existing ground-based mobility solutions, which suggests an opportunity for future innovation. Both of these elements are crucial for differentiating AAM services in a post-launch market where user experience and safety will play significant roles in determining success.

Given all these considerations, we score the Technology Dimension of the AAM sector as having made considerable progress but with room for further enhancements. The technology race within AAM is far from concluded.

Now, it’s time to pivot our attention to another critical aspect: the funding landscape. 

(2/8) The Funding Environment

The AAM ecosystem’s funding environment is a vital determinant of its capacity to innovate, scale, and ultimately commercialize, due to the massive capital requirements needed to develop a new type of aircraft. 

Without sufficient funding, bringing new AAM technology to life is nearly impossible.

Let’s take a closer look at the current funding environment from three different perspectives:

1. VC Flows into AAM: A Turbulent Journey

The Venture Capital funding landscape for AAM startups has been a roller coaster in recent years, reflecting broader VC trends yet amplified by the sector’s unique attributes. 

• After peaking in 2021 with an impressive $7.7 billion USD across 121 deals, the following two years have seen a stark decline. 

• In 2023, investments plummeted to $1.3 billion USD with just 46 deals, marking an 83% drop in funding and a 62% decrease in deal count from the peak.

How can this fluctuation be explained? 

The investment frenzy in 2021 was primarily fueled by:

• An accelerating interest in electric flying and autonomous technology (driven by the autonomous automobile hype), with technological advancements generating a lot of hype. Examples include battery density improvements and new aircraft vehicle designs.

• A flood of “cheap money” through central banks combating pandemic-induced economic slowdowns ended up being invested in high-risk bets such as Advanced Air Mobility, ultimately leading to the SPAC bubble we explored before.

• A changing VC narrative shift towards investments in sustainability and climate-tech startups to accelerate the “decarbonization of everything.”

However, when the broader financial environment shifted — think of rising interest rates and inflation — Venture Capitals became a lot more cautious.

• The global economic slowdown shifted investor preference towards safer assets.

• The underwhelming market performance of several publicly traded AAM companies, compounded by delayed milestones, further cooled down investor sentiment.

• Ultimately, a growing awareness of the sector’s technological and regulatory hurdles slowed down over-optimistic timelines and market projections.

This shift in the macro environment poses significant challenges for the sector. AAM startups must now showcase much more concrete and short-term progress to attract new investments. Such essential developments include measurable technological innovations such as flight range improvements, regulatory achievements such as FAA clearances, or strategic alliances that lead to “unfair advantages” over its competitors, such as partnerships with airlines or collaborations with automotive firms to master manufacturing, to name just two examples. 

Given the astronomical costs associated with aircraft development, certification, and scaling — often running into billions — the path forward for the industry will prove daunting. To put the capital needs into perspective, achieving certification for a new aircraft type is a monumental financial undertaking.

Drawing parallels from the commercial aviation sector provides further insight into the magnitude of these capital requirements: 

• For instance, the development of Bombardier’s C-Series, an aircraft designed to carry between 110 and 135 passengers (similar to short-haul electric aircraft prototypes), necessitated an investment of approximately $6 billion USD. 

• Similarly, the Embraer E-Jet E2 family, which wasn’t a completely new design but rather a significant upgrade of its predecessor, incurred development costs of at least $1.7 billion USD. 

These examples highlight the extensive financial resources required to bring new aviation technologies to fruition.

As a result, the current investment climate suggests a looming consolidation within the AAM industry, with bigger players soon to take over a lot of their smaller peers who will be unable to compete in the new environment. Companies that can secure funding during this lean period are likely to emerge as sector leaders. No wonder investors are now favoring companies with a more transparent path to commercial success and regulatory approval, in line with our 2023 VC projection of “substance over hype.”

2. Identifying Wall Street’s Favorite AAM Contenders

The Advanced Air Mobility sector remains largely conceptual at this point, with actual commercial operations yet to materialize. This nascent stage of development makes it challenging to pinpoint the true frontrunners in the industry. No real-world operations means comparisons are often based on theoretical frameworks, prototypes, and envisioned services rather than tangible products or services. 

In this environment, one practical approach to assessing the progress and market sentiment towards the main AAM contenders is by examining their share price performance, at least for those that have ventured onto the public markets.

A look at the share price movements since the end of 2022 highlights the perceived momentum of various AAM companies. 

• As illustrated in the chart below, Archer Aviation leads with a remarkable 177% increase in its share price, followed by Joby Aviation with a 73% rise, and Ehang, up by 23%. 

• Meanwhile, Eve, Lilium, and Vertical Aerospace trail behind, with Vertical Aerospace experiencing a notable decline of 79%, Lilium dropping by 18%, and Eve seeing a decrease of 11%.

It’s essential to approach these figures with caution, as stock prices are inherently volatile. Nevertheless, these trends offer valuable insights into the current momentum within the AAM sector:

• Archer Aviation’s impressive stock growth could be attributed to several pivotal developments. These include its Part 145 certification from the FAA, the ramping up of manufacturing, its successfully perceived flight test program, and robust support from strategic investors.

• Joby Aviation has likely seen its stock bolstered by the completion of the third stage of the FAA certification process, announcements of strategic launch partnerships (e.g., with Dubai’s Road and Transport Authority), and ongoing investments from renowned companies.

• Ehang’s stock has benefited from its unique position as the only AAM company with a certified eVTOL aircraft, the Ehang 216, in the Chinese market, even though the design of the Ehang 216 is unlikely to receive approval from Western regulators like the EASA or FAA.

For the laggards, the reasons behind the stock price declines seem also traceable:

• Eve is navigating difficulties related to development timelines and additional funding, now turning to loans as its last resort.

• Both Lilium and Vertical Aerospace have encountered delays in their eVTOL developments. Furthermore, Vertical Aerospace faced setbacks due to an accident involving its prototype during a test flight.

While stock price movements shouldn’t be overinterpreted, they certainly provide a window into how investor sentiment is beginning to differentiate AAM contenders into perceived frontrunners, associated with optimism, and laggards, viewed more bearishly. 

Companies meeting their promised timelines, achieving test flight successes, and securing regulatory approvals are rewarded by the market, whereas those falling short on these milestones lag behind. 

Essentially, we’re witnessing the separation of the wheat from the chaff. As previously highlighted, this dynamic suggests a trend toward increased M&A activity, where stronger entities are likely to absorb the weaker ones. This consolidation aims to fortify market positions, acquire critical technologies, and integrate highly skilled teams.

3. Assessing Survival Runways

Transitioning from market sentiment, we shift our focus to a critical company characteristic that’s gaining much more prominence in this era of limited funding: the survival runway. This term refers to the duration a company can maintain its operations with its existing cash reserves without needing to secure additional capital.

To gain a clearer picture of the AAM’s financial stability, we examined the burn rates of the six publicly listed AAM firms relative to their historical fundraising. The burn rates, derived from the latest quarterly or annual reports, reflect the expenditure over the preceding quarter or year and serve as a basis for future projections.

This analysis reveals several key insights:

• Joby Aviation clearly appears as the frontrunner in terms of available cash, boasting a cash runway extending beyond 30 months, thanks to a series of successful follow-on funding rounds. 

• On the opposite end of the spectrum, companies like Lilium and Vertical are facing a precarious financial situation, with less than 5 and 7 months of cash runway left, pushing them into urgent mode for new funding.

• Archer finds itself in a somewhat safer yet still cautious position, with a runway of approximately 12 months. This gives Archer some leeway but underscores the pressing need for additional funds to support ongoing development and eventual scaling. Its current global roadshow is a testament to this effort.

• Eve stands out for its defensive financial management, boasting a cash runway of about 36 months. This substantial buffer is a result of Eve’s cautious cash use, as we’ll explore further.

This comparison of cash runways is crucial but requires a nuanced perspective. While it’s essential for AAM companies to invest significantly in engineering and manufacturing to progress their eVTOL aircraft development, this is not the time for reckless spending. 

Particularly concerning are companies heavily investing in sales and marketing, like extensive air show appearances, or general and administrative expenses without clear technical milestones. This raises efficiency questions if not strategically managed. It’s about finding the right balance: a) promoting the vehicle to attract future investments, while b) ensuring most efforts and resources are primarily focused on aircraft development. Unjustified spending on marketing and non-developmental activities cannot be afforded at this stage. 

As a result, operational adjustments may also be necessary to cut burn rates, potentially scaling back on certain initiatives (e.g., Volocopter’s reduction in VoloIQ development or halting VoloConnect) or pivoting towards activities that could generate revenue now (for instance, Joby and Archer’s moves to engage with the defense sector).

For a deeper dive into how efficiently companies are using their funds, we’ve compared each company’s total cash consumption against the total funding they’ve received up to December 2023.

• As expected, Eve and Joby emerge as the most financially prudent, having utilized 33% and 56% of their received funding (incl. granted credit lines), respectively. 

• Conversely, Lilium and Vertical are on thin ice with only 17% of their historical capital remaining. Their substantial fund consumption is linked to aggressive expansion strategies and, to some extent, higher operational costs—underscored by incidents like the loss of aircraft in accidents for both Lilium and Vertical.

All of this paints a clear picture: as the AAM industry navigates a challenging funding landscape, strategic financial management will be key. Those who strike the right balance between development focus and capital efficiency stand the best chance of weathering the storm and leading the sector into its next phase of commercialization.

Scoring the AAM Funding Dimension

With all this information in front of us, it’s time to score the current funding environment of the sector. Considering the constricted Venture Capital funding landscape, the varied stock performance of listed AAM providers, and the precarious financial standing of numerous significant companies, we’ve clearly observed a downturn in our total scoring for the Funding dimension compared to previous years. 

As a result, we’ve adjusted our 2024 score from 2.5 to 2.0. 

It’s clear: the industry is in urgent need of sustained financial investment. Without it, the AAM sector risks facing implosion.

What could lighten up investor sentiment going forward? Regulatory progress might be one component. We want to explore this category next.

(3/8) The Regulatory Status Update

The journey to realizing Advanced Air Mobility (AAM) extends well beyond securing the necessary billions for technological advancement. While achieving fully functional AAM vehicles like air taxis and electric aircraft marks a significant milestone in and of itself, these innovations still face the colossal hurdle of stringent aviation safety regulations before they can take off into operational reality. 

The aviation sector, renowned for its rigorous safety protocols, rightfully demands comprehensive regulatory frameworks to ensure safety. As we delve into the state of AAM regulation in 2024, our focus shifts to understanding how emerging AAM technologies align with existing regulatory measures and what steps are necessary to integrate them into the global airspace. 

The Rising Regulatory Narrative For AAM

The increasing prominence of regulatory discussions in the media landscape clearly indicates that regulatory compliance and certification are now a pivotal concern for the AAM industry. 

Over the past five years, media coverage related to AAM regulation has not only grown but is projected to hit a record high in 2024.

This surge has been largely fueled by the significant regulatory milestones that have been achieved by leading AAM contenders:

• Joby Aviation has recently completed three of the five stages of the type certification process, becoming the first Western air-taxi contender to reach this milestone towards commercialization.

• Archer is preparing for certification as it started building three type-conforming, piloted Midnight aircraft to be used in for-credit flight testing with the regulator, which is expected to begin later this year.

• Last but not least, Ehang, from China, has already secured full-type certification for its aircraft, which was issued by the Civil Aviation Administration of China.

Without a doubt, regulation and certification have become the center of attention for aspiring AAM contenders and the industry as a whole.

Regulatory Divergence in Advanced Air Mobility

More important than public attention is the actual progress on the regulatory and certification fronts. Today’s AAM regulatory framework is characterized by a varied landscape across major markets, including the United States, Europe, the United Arab Emirates, Singapore, and China. 

Each region adopts unique strategies to integrate these new air mobility solutions into their airspace, urban infrastructure, and legal systems. We have synthesized these variations into a simplified comparative table to illustrate the differences clearly.

Synthesizing all these insights, here is how the different countries approach AAM regulation as of today:

China’s Comprehensive Approach 

China’s regulatory framework is notably thorough, encompassing a broad spectrum of requirements. It addresses 10 specific regulatory aspects, including stringent certifications for aircraft and operators, detailed pilot licensing, and rigorous infrastructure approvals, particularly concerning vertiport construction and operation.

Leadership in the UAE and Singapore

The UAE, especially Dubai and Singapore, are at the forefront of the most advanced AAM regulatory frameworks. 

The UAE’s regulations, including CAR-UAM and Law No. 04 of 2020, span all 15 aspects analyzed, showcasing its proactive stance towards becoming a global AAM leader. 

Singapore’s regulations cover 14 of these aspects, embedded within its “Smart Nation” initiative, which seeks to leverage technology for enhanced urban mobility. Unlike many regions, Singapore does not differentiate between drones and UAM; instead, it treats all unmanned aerial systems (UAS) as part of a holistic new technology approach.

Cautious Strategies in the US and Europe

Both the United States and Europe take a more measured approach to AAM regulation. 

The US is extending its existing helicopter transportation rules to include AAM, aiming for a smoother integration with current aviation systems. 

Conversely, the European Union is working on a dedicated AAM regulatory framework to ensure harmonization with its existing air transport systems. This methodical approach may slow progress but is designed to minimize regulatory and operational discrepancies.

Given this scattered approach to regulation across major (potential) markets, we foresee several operational challenges for the AAM industry going forward.

1. The lack of regulatory uniformity poses significant hurdles for global AAM operators. Adapting to diverse regional regulations will likely require specific aircraft designs or operational adjustments by country, complicating global scalability and compliance.

2. Differing regulatory strictness reflects the varying levels of risk tolerance and safety cultures across regions. Regions with less stringent regulations might facilitate faster market entry but could also lead to inconsistent safety standards and potentially riskier operations, particularly concerning flight paths and operational limitations near residential zones.

AAM Companies’ Path to Market Readiness

As we examine the certification progress of individual air-taxi contenders, it becomes clear that the journey to market readiness is varied and complex.

The certification ranking, illustrated in the chart below, reveals significant disparities among top players in the Advanced Air Mobility (AAM) sector.

China’s Ehang leads the race, having already secured full-type certification, as previously mentioned. This achievement positions the company at the forefront of the industry, ready to initiate real-world operations. Close on its heels are AutoFlight, Volocopter, and Joby Aviation, each on the brink of entering the type certification stage. This critical phase will test their readiness to meet stringent regulatory standards and prepare for commercial deployment.

Based on our understanding of the AAM ecosystem, the chart provides three additional key takeaways from our point of view:

1. The ability to navigate through these certification stages is increasingly becoming a crucial factor for AAM contenders to secure additional funding. With investor sentiment shifting towards startups that demonstrate a clear timeline for market operations, progressing through certification is no longer just a regulatory requirement but a significant competitive edge.

2. As these companies approach the final hurdles of certification, their success will heavily depend on their ability to engage with regulatory bodies effectively. This necessitates a deep understanding of regulatory frameworks and the ability to influence them, skills that may require AAM contenders to enhance their teams with regulatory and compliance experts.

3. With Ehang already certified and others not far behind, the AAM industry is (finally) transitioning from speculative potential to actual market presence. This shift marks a long-aspired-to milestone where theoretical efficiencies and operational capabilities of air taxis will be tested under real-world conditions. The success of these early movers will set a precedent for the scalability of AAM solutions, paving the way for broader adoption and potentially reshaping urban mobility.

Scoring AAM Regulation Progress

Given all these considerations, we rate the Regulation Dimension of the AAM sector as having advanced compared to last year.

However, there is significant room for further enhancement. This assessment reflects the reality that only one company has reached Type Certification yet and that regulatory frameworks are still works-in-progress. Particularly, the absence of a globally uniform regulatory framework poses ongoing challenges.

As we observe these advancements, the next critical aspect to delve into will be “Scalability” — the fourth dimension in our AAM market readiness assessment.

Understanding how AAM technologies transition from prototypes to mass production is crucial for assessing their commercial viability and long-term sustainability.

(4/8) The Scaling Challenge in AAM

The journey to transform Advanced Air Mobility from a theoretical vision into a commercially viable reality hinges significantly on the industry’s ability to scale. Scalability is crucial because it enables the industry to achieve affordable unit costs, which can only be realized if AAM vehicles are produced at scale.

Scaling AAM involves two critical components: ensuring a sufficient supply of AAM vehicles and infrastructure and generating substantial demand for these offerings. Both components must be observed across the three fundamental stages of the AAM landscape: Pre-Launch, Launch, and Post-Launch.

• In the Pre-Launch phase, the focus is on developing and certifying AAM vehicles and establishing manufacturing capabilities. Simultaneously, efforts must be made to build market awareness and interest, secure pre-orders or commitments, and engage with potential partners and stakeholders.

• During the Launch phase, the industry must create a distributed network of vertiports and charging infrastructure and a seamless supply chain. On the demand side, this phase involves implementing marketing and sales strategies, fostering early adopter communities, and providing initial operational services.

• In the Post-Launch phase, scaling Maintenance, Repair, and Overhaul (MRO) aftermarket services becomes critical, along with managing ongoing supply chain complexities and fleet management systems. Sustaining customer engagement, expanding market reach, and adapting to evolving consumer needs and regulatory landscapes are essential to ensuring ongoing demand.

Achieving scalability in AAM requires a comprehensive approach that addresses these factors holistically. It’s not enough to merely produce AAM vehicles.

The visual below outlines a detailed list of the most important scalability factors across supply and demand and across these three stages of AAM.

Let’s take a closer look at a few of these aspects, starting with the demand side.

Demand Dynamics: A Closer Look at AAM Aircraft Orders

The direct demand for AAM aircraft is undeniably the most critical element in scaling Advanced Air Mobility. Without substantial demand for AAM vehicles, there is little incentive to invest in and scale the necessary infrastructure, such as vertiports.

Fortunately, the demand for AAM vehicles, as evidenced by orders placed, looks promising.

The 12 most prominent AAM companies have collectively secured over 16,000 vehicle orders, with an estimated order book value exceeding $42 billion USD.

However, it’s essential to approach these figures with caution. Much of this order book value is tied up in Letters of Intent (LOIs) and options, which do not carry the same weight as firm commitments. The true level of interest and commitment will only become apparent once customers are required to make real downpayments. This phase will reveal which players are genuinely committed and which might have used these orders as a marketing or PR strategy.

Despite this caveat, the current order numbers indicate a strong market interest in AAM. In fact, this substantial order book value could have a positive ripple effect, demonstrating investor and operator confidence in the sector’s future growth, which could drive further investment in infrastructure, research and development, and other critical areas necessary for the industry’s scalability.

However, the big question remains whether the companies in this ranking, especially those at the top of the order list, such as Eve Air Mobility (2,950 orders), Electra (2,057 vehicles), and Ehang (1,868 orders), will be able to meet such high volumes. Achieving this will require robust manufacturing capabilities and effective supply chain management to avoid production delays and fulfill market expectations.

Before delving into the supply-side challenges, let’s examine which types of companies have placed these pre-orders thus far. This will provide insights into the sincerity and potential longevity of the current interest in AAM.

Diverse Customer Base Strengthens Confidence in AAM Demand

One insight that certainly strengthens our confidence in the robust demand for AAM vehicles, despite the mostly non-binding nature of these orders, is the diversity of the customer groups showing interest. The breakdown of AAM orders by stakeholder group reveals six distinct types of potential customers, reflecting a broad spectrum of applications and interests.

The largest group comprises airlines, which account for more than a third (35%) of all AAM orders to date. These players seem to recognize several opportunities: expanding their networks through AAM integration, providing enhanced services to customers (likely targeting their elite passengers given AAM’s expected price points), and potentially replacing existing small fossil-fueled aircraft with “cleaner” AAM vehicles on ultra-short-haul routes.

Beyond airlines, other significant customer groups include cargo companies, which see potential in utilizing AAM for efficient and flexible logistics solutions. Additionally, traditional corporations, including automotive firms, have shown substantial interest. Governments also make up a notable portion of the orders, indicating public sector investments in AAM technology for various applications such as (niche) public transportation and emergency services.

The interest from the corporate sector is particularly intriguing. It suggests that companies see potential in using AAM for business shuttle services, offering a new mode of executive transportation that could enhance efficiency and prestige.

This diverse customer base highlights the versatile applications envisioned across different sectors, and we clearly interpret this as a positive indicator for the industry’s ability to scale. Demand seems to be well in place.

Supply Side: Can AAM Companies Deliver on Demand?

With demand more or less established (at least on paper), the critical question shifts to whether AAM companies can deliver on this demand. Achieving supply-side scalability will necessitate robust manufacturing capabilities and efficient supply chain management. The ability of AAM companies to scale production to meet this high demand will be crucial, as will the development of supportive infrastructure.

To gain more clarity on the emerging AAM industry’s ability to scale production, we must examine various data views and indicators that shed light on this aspect.

The chart below illustrates the ambitious production plans of the eVTOL industry.

The largest five AAM contenders expect to have over 7,000 eVTOLs operational by 2030, based on their investor presentations.

This is undoubtedly an aggressive projected ramp-up in production, raising the question of whether these numbers are realistic.

We don’t think so. Here’s why:

1. Technological Complexity

Manufacturing advanced eVTOLs involves complex aeronautical carbon composite structures and cutting-edge propulsion systems, which are more challenging to scale compared to traditional aircraft materials. The envisioned eVTOL production ramps, going from zero to thousands of aircraft per year within a few years, have never been achieved before for such complex aeronautical structures made of carbon composites. Typically, production volumes in aviation increase much more slowly, around 30-50% per year. Therefore, we anticipate a smaller number of manufactured eVTOL aircraft compared to what we have seen in the traditional aerospace industry.

2. Supply Chain Constraints

Ensuring a steady supply of critical components like batteries and carbon fiber materials will be essential to meeting production targets, especially in times of unstable global supply chains. Additionally, the rise in commercial aerospace production leads to direct competition between these two segments. The key question will be: Is AAM or commercial aerospace more attractive for suppliers? The answer is probably the latter, at least in the foreseeable future, given its immediate revenue potential.

3. Certification and Quality Assurance

Achieving regulatory certification for each unit and maintaining high-quality standards during rapid scale-up will be significant hurdles for AAM OEMs. Establishing the required supply chain and certified production processes for carbon composite structures like wings and fuselages is extremely challenging and costly. Automotive suppliers and methods cannot be used due to stringent aerospace certification requirements unless they adhere to these standards.

4. Investment Needs

Significant capital investments will be required to achieve these production goals. OEMs will need to secure funding not only for production facilities but also for supply chain development and certification processes, likely in the range of hundreds of millions to over a billion dollars per company. Capital expenditures of over $700 million USD may be needed just to cover excess production costs in the initial ramp-up phase, on top of over $1 billion USD for certification and setting up production facilities. Public eVTOL companies currently have estimated cash reserves of only 9-39 months at current spending rates, insufficient to fund the full production ramp-up phase after certification (see our chapter on the funding environment). Significant additional funding, beyond what has been raised so far, will be required for eVTOL companies to establish production at scale and generate revenue from passenger operations.

5. Strategic Partnerships

Next to the capital requirement, collaborations with established aerospace manufacturers, automotive companies, and suppliers will be crucial in overcoming the production and supply chain challenges and realistically ramping up certified production facilities and supply chains for the aircraft.

Companies like Archer, Joby, and Eve Air Mobility have already forged strong partnerships with Toyota, Stellantis, and Embraer to support them in gaining scaling and supply chain expertise. Lilium is also well positioned, given that most of its leadership comes with experience from Airbus. However, much more partnership expansion is needed across the board.

Given these concerns, it’s unlikely AAM contenders will be able to deliver what they promise in their investor presentations.

Let’s take a look at what appears to be a more realistic outlook on production numbers.

Realistic Production Ramp-Up Expectations

To get a more realistic idea of how the production ramp-up for AAM vehicles might look, it is useful to examine real-world production numbers from the aviation industry for similarly sized aircraft. 

The Cirrus SF50 jet serves as a good benchmark. Historic production output for the Cirrus SF50, spanning from 2016 to 2020, provides a clearer picture of what to expect in the AAM sector. 

As illustrated below, Cirrus was able to scale production from zero in 2015 to 84 units within five years.

The Cirrus SF50 production ramp demonstrates a gradual but steady increase in output over several years. This production, which leverages established manufacturing processes and technologies, highlights the inherent challenges in scaling new aeronautical carbon composite structures required for AAM like eVTOLs. Scaling production for aircraft using aluminum composites is significantly easier than scaling production for novel composite materials, not to mention the additional complexities introduced by electric propulsion systems in eVTOLs.

This example shows that the initial years of AAM production will likely see modest outputs, far from the ambitious projected rates. AAM manufacturers must align investor and operator expectations with realistic production capabilities and timelines to avoid potential market disappointments.

For instance, Eve Air Mobility has received 2,950 aircraft orders to date. 

• Assuming a modest ramp-up starting with 20 aircraft in the first year, followed by an annual increase of 40%, Eve would reach a production capacity of 413 aircraft per year after ten years. 
• Over this period, Eve would have delivered 1,395 aircraft, leaving an open order book of 1,555 aircraft, which would take an additional four years to fulfill. 
• This implies that some customers might have to wait up to 14 years for delivery. 

This outlook is unacceptable because such long lead times would likely erode customer confidence and dampen market enthusiasm, potentially stalling the momentum of the entire industry.

It highlights that the main bottleneck and challenge in the AAM sector is currently not the demand but the ability to supply aircraft to customers.

Strategic Partnerships Enable the Path to Scalability

One promising insight from analyzing AAM companies’ manufacturing capabilities is their commitment to forming robust supplier networks and partnerships. 

This strategy indicates that the AAM industry has the potential to significantly enhance its production capacity going forward. 

Interestingly, different AAM contenders have adopted varied strategies to build these networks, which could be critical to their success.

The chart below provides an overview of the supply partnerships that major AAM OEMs have established in recent years. It categorizes the partnerships by different technological and production components such as airframes, composites, motors, batteries, flight control, and more. 

The chart shows which companies Archer, Joby, Lilium, Vertical, Volocopter, and Eve have partnered with in each category to bolster their supply chains and manufacturing capabilities.

Archer has adopted a mix of in-house development and partnerships with established aerospace companies. For example, Archer has partnered with FACC for airframes and Hexcel for composites. 

Lilium and Vertical follow a full-blown external supplier strategy, having secured partnerships with big names in the industry like Honeywell, Toray, and GKN. Similarly, Volocopter and Eve rely heavily on external partnerships with companies such as DG Flugzeugbau and FACC, highlighting their strategy to leverage existing aerospace expertise.

On the other hand, Joby pursues a strong in-house development approach, supplemented by strategic acquisitions. 

• For instance, Joby recently acquired Xwing, a startup developing autonomous flight technology. 

• This strategy is aimed at retaining all critical technologies and IP in-house, which could provide tailored solutions for their mission. 

• However, this approach involves significant upfront capital investment and higher risks.

The internal vs. external supplier approach is particularly interesting for the most critical AAM components. Batteries and motors, for example, are critical areas where Joby has decided to develop its own batteries. Other players like Lilium, Eve, and Vertical rely entirely on suppliers for these components.

Where all major AAM contenders follow the same strategy is for flight control systems, training, and cabin components. These are often sourced from well-established aerospace suppliers like Honeywell, Safran, and Lufthansa Aviation Training, as these partnerships ensure reliability and access to already certified components and service standards, streamlining the production process. Generally speaking, these partnerships are crucial for building robust supply chains capable of scaling up production to meet future demand. By collaborating with established aerospace suppliers, AAM companies leverage existing expertise and infrastructure, reducing time-to-market and improving product quality.

Collaboration with well-known suppliers also helps mitigate risks associated with production and certification processes. Established suppliers bring proven technologies and processes, which are critical for the nascent AAM industry facing stringent regulatory scrutiny.

In summary, possessing manufacturing capabilities and access to the required suppliers for various components cannot be overstated. Establishing a sophisticated aftermarket and parts supply network is also crucial to ensuring that AAM aircraft can quickly return to service after a parts failure. OEMs can leverage the existing global network of aerospace suppliers to avoid ramping up their entire aftermarket facilities independently.

Archer and similar companies are currently better positioned to partner with suppliers on existing, proven materials and parts. In contrast, Joby has an advantage in securing critical, future-relevant technologies that do not yet exist in today’s aerospace operations. 

This strategic balance between established partnerships and in-house development will determine the speed to market and overall scalability of AAM manufacturers.

The Road to Full Scalability

Despite these sophisticated supplier strategies, the AAM industry still has a long way to go until it reaches its full potential for scalability.

The current state of the AAM industry can be visualized as being in its nascent production stage. 

• Most companies are in the process of proving their AAM concepts and ensuring the reliability and safety of a single aircraft. This involves extensive testing, certification, and initial operations to gather data and refine the technology.

• A few selected players, such as Lilium, Joby, and Archer, have advanced to the production line stage. They are setting up the infrastructure needed to produce AAM vehicles in greater quantities, which involves investments in manufacturing technology, workforce training, and establishing initial supply chains.

But to achieve true scalability, the industry must progress through several critical stages:

Stage 3: To meet production targets and reduce logistical challenges, a network of manufacturing facilities becomes necessary. This stage involves optimizing the supply chain, enhancing coordination among facilities, and increasing production rates to meet market demand. The different facilities need to be strategically located in key markets, close to customers.

Stage 4: Looking further ahead, geographically distributed manufacturing facilities will be essential. These facilities should be located in key markets to minimize logistical challenges and ensure timely delivery to customers. This stage also involves further optimizing the supply chain and increasing production rates to meet growing market demand.

Stage 5: Ultimately, to support a large fleet of AAM vehicles, a comprehensive network of aftermarket services and parts supply distribution centers is essential. This ensures that maintenance, repair, and overhaul (MRO) services are readily available, minimizing aircraft downtime and ensuring operational reliability. Building a reliable and efficient aftermarket support network is crucial for gaining customer confidence. Ensuring that AAM vehicles are well-maintained and operational will be critical for widespread adoption and long-term success.

Interestingly, the first AAM OEMs, such as Lilium with its “Lilium POWER-ON” program, have already recognized this critical aspect and established dedicated teams and units for designing a sophisticated aftermarket and parts offering.

Scoring the AAM Scalability Dimension

Reflecting on both the demand and supply facets of AAM scalability, it’s evident that the picture is mixed.

On the demand side, AAM appears promising, with substantial orders booked. The industry’s projected supply of vehicles, according to AAM companies’ announced production outlooks in investor presentations, seems to match these demand figures.

However, the reality is likely to look much different. Manufacturing advanced AAM vehicles like eVTOLs involves complex aeronautical carbon composite structures and cutting-edge propulsion systems, which pose significant challenges. The aerospace sector has never achieved such rapid production scaling for these complex materials.

The projected production ramp-up plans by AAM contenders contrast sharply with historical trends in aerospace manufacturing. As a result, the initial years of eVTOL production will likely see modest outputs, far below the ambitious projections. In our view, the industry must urgently temper its production expectations and focus on building robust supply chains and manufacturing capabilities to meet its targets and not disappoint market participants. Current outlooks are unrealistic.

The key takeaway: For now, we have a supply problem. 

As a result, we score the AAM industry’s scalability ability at a 2.5 out of 5. This score reflects the untapped potential that still needs to be leveraged.

However, it’s important to mention that this still represents a significant leap from 2023, as we have seen substantial progress over the past 12 months.

Here is a short list of recent events on the supply side:

• Lilium Jet enters production for test aircraft.
• Joby marks its production launch.
• Flying taxi Volocopter approved for production.
• Archer completes the installation of a high-volume battery pack manufacturing line.
• Stellantis invests an additional $55 million USD in Archer for manufacturing ramp-up.
• Ehang delivers 27 EH216.
• Archer starts construction of a manufacturing plant.
• Lilium starts production of the Lilium Jet.
• Joby starts construction of a manufacturing plant in Ohio.
• Eve Air Mobility names four new suppliers for electric air taxis.

These developments were not present in such a form in prior years, highlighting the industry’s progress.

(5/8) The Ecosystem Imperative for AAM

As our Scalability chapter has shown, Advanced Air Mobility can only transition into a commercially viable reality with a diverse and well-integrated ecosystem in place. In this next chapter, we’ll delve deeper into what this AAM stakeholder ecosystem needs to look like.

To get going, let’s look at global media coverage related to AAM.

It turns out that the Advanced Air Mobility trend has been increasingly dominating headlines around the world.

This surge in media attention is primarily driven by the growing number of companies entering the ecosystem, especially those from adjacent industries. 

• For instance, Honeywell has highlighted its contributions to the AAM industry through advancements in electric propulsion, battery technology, and autonomy. 
• Meanwhile, Lufthansa Group announced a partnership with Lilium to explore opportunities in the air-taxi space.

So far, 2024 is shaping up to be the strongest year in terms of media coverage.

• This is largely due to significant progress being made on the AAM aircraft side, such as Ehang delivering over 20 eVTOLs and Joby manufacturing their third aircraft.
• Additionally, successfully piloted test flights, like Volocopter’s recent demonstration in Paris, and the increasing involvement of ecosystem stakeholders—such as airports and regulatory agencies—are accelerating the development of the necessary physical and digital infrastructure for these services.

However, a closer examination reveals that approximately 70% of the media reporting focuses on AAM aircraft exclusively, with only 30% covering other critical ecosystem building blocks. This observation underscores the importance of viewing AAM not just through the lens of aircraft development but as part of a comprehensive industry ecosystem perspective. 

This ecosystem includes infrastructure, regulatory frameworks, and operational models, all of which are essential for the industry’s future success.

What exactly does this ecosystem need to consist of? 

The following section will provide a practical framework, including a maturity assessment of each critical ecosystem building block.

Mapping the AAM Ecosystem

To fully understand the scope and complexity required to realize AAM, we have sketched a basic framework that provides an overview of the needed AAM ecosystem of the future, detailing the various segments and key players involved.

The ecosystem is divided into six primary categories: AAM Aircraft, Support & Service, Physical Infrastructure, Digital Infrastructure, Flight Operations, and Customer Integration.

This visual representation highlights several critical insights:

1. AAM’s True Complexity

The AAM industry is far more complex than purely developing and manufacturing aircraft. Success in AAM requires a coordinated effort across multiple sectors, underscoring the need for extensive collaboration and integration. The ecosystem encompasses a wide range of interconnected components, such as landing infrastructure, airspace management, digital infrastructure, and customer integration into existing transportation systems. For instance, the infrastructure alone is a complex domain, involving vertiports, zoning and permitting processes, and airspace management, among others.

2. Interdependency of Ecosystem Components

Achieving success in AAM depends on simultaneous progress across all six buckets. A delay or failure in one area could significantly block the growth of the entire ecosystem. 

• For example, even if aircraft production scales as planned, a lack of sufficient landing infrastructure or digital airspace management could render the entire operation ineffective. 
• This interdependency stresses the importance of synchronized development across all facets of the AAM landscape.

3. Diverse Entry Points for Businesses and Investors

The wide range of components within the AAM ecosystem presents numerous opportunities for businesses and investors. Companies can enter the market through various avenues, such as aircraft manufacturing, software development, or infrastructure construction. 

This diversity allows for a broad spectrum of expertise and innovation to contribute to the industry’s growth. Whether through building vertiports, developing advanced propulsion systems, or creating customer-facing digital platforms like Uber-like mobile apps, there are multiple entry points for stakeholders from various industries looking to capitalize on the AAM industry’s potential.

4. Significant Regulatory Challenges

The complexity of the ecosystem also highlights significant regulatory challenges, requiring coordination among various government agencies and potentially the creation of new regulatory frameworks. 

For example, the safe operation of AAM aircraft will depend on the successful integration of vertiports into urban environments and the development of airspace management systems that can accommodate these new vehicles. Addressing these regulatory challenges is crucial to ensuring the safe and efficient operation of AAM services.

5. Technological Convergence Across Sectors

The AAM ecosystem leverages technologies from various fields, including aerospace, digital systems, ground transportation, and urban development. This shows a trend toward technological convergence in the overall transportation landscape. 

This trend highlights the collaborative nature of the AAM industry, where breakthroughs in diverse fields converge to redefine how we approach mobility.

In summary, this overview underscores the multifaceted nature of the AAM industry and the need for coordinated, cross-sectoral efforts to bring this vision to life. 

Given this multifaceted nature of the future AAM industry, which AAM building blocks are more advanced than others? 

In other words, which AAM building blocks currently present the hurdles for the industry to prepare for market readiness?

Assessing the Maturity of each AAM Building Block

Given the multifaceted nature of the future AAM industry, it is essential to determine which of the six building blocks are more advanced than others and which currently present hurdles for the industry’s path to market readiness. 

To evaluate this, we assessed the maturity level of each ecosystem component by analyzing media mentions in top-tier news outlets and the distribution of Venture Capital investments received by each building block.

The following chart displays the current maturity levels of each ecosystem segment, measured by the share of overall media mentions from 2020 until June 30th, 2024.

As expected, the analysis confirms our earlier observations: the AAM industry is predominantly focused on developing flying vehicles, while other essential building blocks remain in their extremely nascent stages.

• Specifically, the “Flying Vehicle” segment dominates the discourse, accounting for 72% of total media mentions. 
• In contrast, segments such as Physical Infrastructure, Digital Infrastructure, and Air Mobility Services receive far less attention, with only 9%, 13%, and 6% of mentions, respectively.

This disparity in focus is further reflected in the distribution of VC investments across the different sub-segments of the AAM ecosystem. 

Over the past decade, the majority of investments have been directed toward the Flying Vehicle segment, with significantly less funding allocated to Air Mobility Services, Digital Infrastructure, and Physical Infrastructure.

This insight underscores a crucial challenge for the AAM industry: while significant progress has been made in developing the vehicles themselves—despite none being market-ready yet—other critical components of the ecosystem, such as infrastructure and services, have not received the same level of attention or investment. 

Addressing these gaps will be essential for achieving a fully operational and scalable AAM ecosystem.

Scoring the AAM Ecosystem Dimension

Given the current state of the industry, it’s clear that the AAM ecosystem still has significant ground to cover before it can be considered a fully developed and scalable framework for commercially viable operations. Our analysis points to three major hurdles that must be overcome:

1. Imbalance in Ecosystem Development 

The industry’s heavy focus on aircraft development has led to a lopsided ecosystem, where supporting infrastructure and services remain underdeveloped. While the progress in advanced aircraft is commendable and essential—without a functioning vehicle, there’s no need for a vertiport—the lack of parallel investment in infrastructure could become a bottleneck. The overconcentration of resources on aircraft development introduces systemic risks; any significant delays or setbacks could stall the entire AAM sector, particularly in areas where early investments in supporting infrastructure have already been made. This imbalance likely explains the hesitancy of investors and operators to commit fully to other building blocks, as they wait for aircraft to clear certification hurdles.

2. Funding Gaps in Supporting Segments

A crucial question remains: who will fund the underdeveloped segments of the AAM ecosystem? 

The industry needs to explore alternative investment vehicles, such as public-private partnerships, government initiatives, or industry consortiums, to bridge these gaps. Diversifying investment portfolios to include essential infrastructure and services will be key to building a resilient and scalable ecosystem. Without significant capital infusion into these areas, the implementation of AAM will face delays, even if the aircraft technology is ready. This funding challenge has prompted some AAM OEMs to take matters into their own hands by investing in other ecosystem components, either through their own developments, like Joby’s ElevateOS, or strategic acquisitions, such as Joby’s purchase of Xwing.

Despite the challenges, there are positive signals indicating a gradual shift towards addressing the underdeveloped ecosystem components. 

• In 2024, more capital has been allocated to physical infrastructure than ever before, reflecting a growing recognition of its importance–see funding chart above. 
• However, other ecosystem building blocks have not seen the same level of relative growth, presenting a mixed picture. 

Nevertheless, recent industry activities provide reasons for cautious optimism. For example:

• Lilium’s launch of the PowerON MRO program is a critical step toward establishing the necessary maintenance infrastructure for AAM aircraft, ensuring operational reliability and safety.
• Archer’s collaboration with Falcon Aviation to design and build a vertiport network in Dubai, Abu Dhabi, and the United States signals progress in creating the physical infrastructure needed to support AAM operations.
• Air France/KLM E&M has collaborated with multiple AAM OEMs like Ascendance Flight Technologies and Ampaire to establish aftermarket services, which underscores the importance of developing a robust support infrastructure.
• Robotic Skies’ creation of a global network of over 250 Part 145 repair stations across 50 countries for AAM aircraft is a significant advancement in ensuring the availability of maintenance services worldwide.
• The partnership between Eve Air Mobility and DHL focuses on studying supply chain needs, including spare parts distribution and battery management, which are essential for the sustainable operation of eVTOLs.
• Skyports’ successful raising of an additional $110 million to expand its air taxi infrastructure is another positive indicator of growing investment in the necessary physical infrastructure.
• Last but not least, Hyundai and Kia’s partnership highlights the potential for AAM technology to integrate with existing transportation solutions, showing progress in public acceptance and operational planning.

In light of all these observations, we slightly adjusted our AAM ecosystem score from 2 in 2023 to 2.5 in 2024.

This modest increase reflects the industry’s small but meaningful steps forward in expanding and investing in the overall AAM ecosystem.

While progress is being made, the road ahead remains long, and continued focus on building a balanced, well-funded, and integrated ecosystem will be critical to the future success of Advanced Air Mobility.

(6/8) Are Viable Business Models the Missing Link?

It’s now time to address the elephant in the room: a thorough evaluation of the business models underpinning AAM operations, especially air-taxi services.

And, to put it bluntly, the findings don’t inspire optimism. 

In fact, the lack of a viable business case could pose the greatest threat to the sector’s future—much like we saw with Lilium’s recent financial downfall.

Let’s explore why these business model challenges could determine the fate of the AAM sector, step by step.

The Elusive Business Model of AAM

Admittedly, the uncertain business outlook for AAM is nothing new. While there’s been plenty of excitement surrounding the idea of soaring through the skies in “air taxis,” concerns have always lingered over what actual problem these new vehicles would solve. 

A look at media sentiment over the past five years confirms this: sentiment in AAM-focused press articles evaluating the commercial viability of these ventures reveals that at least 8 out of 10 articles consistently voice skepticism about what viable commercial models could look like.

In other words, which use cases will allow AAM companies to make money? It’s still unclear. 

And this uncertainty has only intensified over the years. As of today, fewer than 10% of articles express optimism about AAM’s commercial outlook, down from 18% in 2020.

The lack of clarity around AAM’s (future) product-market fit is equally apparent when examining how AAM companies have communicated their evolving strategies. 

Lilium and many others, like Archer, have repeatedly pivoted their core business approaches. 

• For example, Lilium initially aimed to be a pure-play OEM, focusing on manufacturing aircraft, similar to the approach taken by traditional aviation giants like Boeing and Airbus. 
• They later expanded their vision to include air-taxi operations—effectively becoming both manufacturer and “airline.” 
• By 2022, however, Lilium refocused solely on aircraft manufacturing. 

These ongoing shifts have not gone unnoticed. 

Analysts have repeatedly highlighted the lack of clear, realistic business strategies among AAM players—a factor that likely contributes to the sector’s deteriorating public narrative.

In all fairness, committing to a single approach is challenging given the ongoing technological developments in AAM:

• Battery advancements are crucial for viable flight operations, so companies constantly need to re-evaluate their strategies.
• Autonomous flight (i.e., no pilot on board) is considered essential for future commercial feasibility, and continuous progress in materials science reshapes what’s possible.
• Moreover, the necessary infrastructure for AAM remains largely hypothetical—questions like who will operate AAM heliports and how passenger services will be managed are still unresolved.

With so many open questions and critical dependencies, it’s difficult for AAM companies to commit to one path.

However, this lack of commitment doesn’t make it easier to believe that AAM firms will eventually find a viable business case, particularly when considering the expected unit economics of today’s industry.

It’s easy to speculate on how “affordable” AAM flights might become ten years from now, but AAM companies won’t have that much time. As we’ve seen with Lilium, investor patience is wearing thin as AAM remains in the phase of isolated, mostly confidential test flights behind closed curtains rather than advancing toward real-world commercial launches.

Once commercial operations begin, unit economics will need to be relatively sound, given today’s industry conditions.

With that said, let’s examine what realistic unit economics look like—and how they align with what AAM companies are currently promising.

Projected Profits vs. Reality

To better understand the economic reality of AAM, let’s focus on two specific AAM companies to keep things tangible and concrete: Lilium and Joby Aviation. 

• These companies were selected from a larger pool based on the availability of underlying data, and while some nuances vary case-by-case, we believe they represent large parts of the AAM industry. Their data should be seen as more than isolated examples.
• For context: Both companies have shared performance data assumptions to justify their approaches and convince investors and potential operators to buy into their vision. 

Let’s start by examining the high-level performance metrics they’ve communicated as the foundation for a viable business case.

Impressive numbers, right? 

Take the expected annual revenue per jet:

• It is projected at $5 million USD and $2.2 million USD, respectively.
• When pairing against estimated jet production costs of $2.5 million USD for Lilium and $1.3 million USD for Joby Aviation, this suggests potential ROIs of around 2x within the first year of operation.

But are these numbers realistic? Let’s take a closer look.

1. Evaluating Lilium and Joby’s Utilization Assumptions

To understand the viability of Lilium’s and Joby’s business models, let’s start with the ambitious utilization rates they’re banking on:

• Lilium believes in 10 hours of daily flight operations (3,600 hours annually).
• Joby expects seven hours daily (2,600 hours annually).

Although these targets may seem achievable to those outside the aviation industry, they reveal some significant issues:

Warning Sign #1: Improbable Daily Flight Time Projections

Reaching 10 or even seven hours of daily flight time is improbable given the nascent state of the industry, the required maintenance and scheduling adjustments, regulatory hurdles, and, most critically, fluctuating demand throughout the day. 

Both companies assume steady demand, but urban air taxis on untested routes will almost certainly see variable interest. For example, Blade Urban Air’s helicopter service between JFK and Manhattan—arguably a minimum viable product (MVP) version of future eVTOL operations—faces limits despite its established routes in arguably one of the busiest transportation markets in the world. 

• With a five-minute flight time per trip between JFK and Manhattan, each trip totals about 30 minutes, including boarding and deboarding. 
• This results in only 10 minutes of actual in-flight time per hour or around 120 minutes of total daily flight time per helicopter, even with a full 12-hour operational window (8 am to 8 pm). 

This daily in-flight time of 2 hours falls far dramatically short of Lilium’s and Joby’s projections of 7 to 10 hours.

Warning Sign #2: Unrealistic Load Factor Assumptions

Beyond overly ambitious daily flight time projections, the companies’ load factor assumptions are equally detached from reality:

• Lilium projects a 75% load factor.
• Joby anticipates a 58% load factor on average per day.

Achieving such high occupancy rates consistently throughout the day will be extremely unlikely on untested routes, especially as demand will likely spike during rush hours and taper off throughout the day. 

Given that AAM companies will need to attract price-insensitive, peak-time commuters, maintaining high load factors consistently is unlikely. 

Any dip in load factors and utilization will lower the passenger count and, thus, the revenue, creating a ripple effect that jeopardizes profitability.

2. Evaluating AAM’s Revenue Per Seat Mile Projections

The overpromising doesn’t end with utilization rates and load factors. 

Let’s now focus on the revenue side of the equation:

• Lilium projects $2.25 USD in revenue per passenger mile.
• Joby estimates $3.00 USD per passenger mile.

Both estimates suggest they ensure profitable operations, so costs per passenger mile must be lower.

While these figures might appear reasonable on paper, they quickly fall apart when compared to independent studies and real-world benchmarks, which paint a very different picture.

Warning Sign #3: Real-World Benchmarks Show Costs Alone Are 10x Higher

To put these projections into perspective, let’s revisit Blade. 

• Blade’s current cost per seat mile ranges from $11.76 USD to $16.25 USD, depending on the route.

• Similarly, Airbus VOOM, a more traditional helicopter operator in São Paulo (now ceased), had an estimated cost of $11.76 USD per mile.

In simple terms, today’s costs for providing comparable urban air services are about 10 times higher than what Lilium and Joby aim to generate in revenue per mile. This implies that their cost estimates would need to be at least 10 times lower than current operators’ costs—a gap that’s not realistic.

Warning Sign #4: Independent Studies Also Undermine Such Revenue Claims

Independent studies echo these cost concerns. 

• For instance, NASA’s study on air taxi services estimates costs between $6.00 USD and $11.00 USD per mile for similar operations.
• This research study estimates eVTOL operational costs around $6.50 USD per mile.

These independent figures make it painfully clear that Lilium’s and Joby’s revenue targets of $2.25–$3.00 USD per mile aren’t just slightly off—they’re disconnected from any grounded economic reality and certainly from any profitable business outlook.

3. Assessing Total AAM Demand: Projections Are Out of Touch

The final piece of Lilium’s and Joby’s optimistic puzzle hinges on the massive demand for future AAM services. 

However, the essential question remains unanswered: What unique benefits will AAM services provide compared to existing transport modes?

To win over consumers, AAM will need to prove its value against existing competitors like Blade’s urban air service in NYC and, on a broader level, more traditional modes of transportation like personal vehicles, public transit, and shared mobility solutions (e.g., ride-hailing).

AAM providers typically lean on two primary arguments for their value proposition:

• Time savings.
• Environmentally friendly, fully electric transport.

Yet, both points deserve scrutiny—leading to our final warning signal.

Warning Signal #5: Questionable Key Selling Points

Our very own comprehensive route attractiveness study, which examined 42 cities across the U.S. and Europe for AAM potential, reveals a stark reality: time savings from AAM services in nearly all cities were minimal, at best.

This finding strikes at the core of AAM’s purported value proposition. 

• If AAM services offer only marginal time improvements, the fundamental use case of Advanced Air Mobility loses much of its appeal. 
• As such, we believe that contenders like Lilium and Joby are clearly overestimating future market demand and, consequently, underestimating operational costs.

The assumption that consumers will flock to “air mobility” for perceived convenience also overlooks an essential question: If there were significant demand, wouldn’t cities already be filled with helicopters?

In summary, the belief that merely offering “air travel” will attract commuters and travelers away from ground-based options is, at best, overly optimistic—and, at worst, a fundamental misjudgment of demand realities in the travel market.

Scoring the AAM Business Case Dimension

As with many visionary tech startups, AAM companies like Lilium and Joby paint an exceptionally optimistic picture of the future. 

• They have every right to do so, especially in the early days of innovation. 
• However, as these companies approach the stage of preparing for commercial operations, it’s time to confront the practical realities.

Established operators like Blade struggle to bring costs below $11 USD per seat mile, while industry experts such as Roland Berger estimate best-case costs for AAM to range from $6 USD to $22 USD per mile. For AAM companies like Lilium and Joby, projecting profitability at revenue rates of $2–$3 USD per mile suggests an urgent need to adjust initial, investor-oriented expectations to align more closely with real-world cost scenarios.

Otherwise, it’s fair to speculate that Lilium and Joby’s approach echoes the failures of past aviation ventures like DayJet and Eclipse Aviation, both of which relied on overly optimistic expectations of utilization, demand, and cost management. These companies ultimately collapsed when faced with market realities, proving that no level of technological advancement can support a fundamentally flawed business case.

In light of these concerns, we’re adjusting our Business Case rating for the AAM sector in 2024 from 2.0 to 1.0—a drastic dip from the previous year. This downgrade reflects a growing skepticism about the viability of AAM business models, especially those that project low operational costs, high revenue per jet, and rapid market adoption. 

As industry expert Richard Aboulafia spot-on concludes:

“Someone offers a product or service with impossibly low unit costs. These low costs are predicated on impossibly high production rates or impossibly high utilization assumptions. These impossibly high utilization/production numbers are, in turn, predicated on impossibly low unit costs. Financial carnage follows.”

In the case of AAM, only a realistic, grounded recalibration will determine whether this sector is truly ready to take off.

(7/8) The Sustainability Mirage: Assessing AAM’s Environmental Claims

Following our exploration into the business model complexities of Advanced Air Mobility, we now turn to the industry’s most frequently promoted promise: sustainability.

In this next chapter, we want to dissect the bold claims that eVTOLs, eSTOLs, and eCTOL vehicles can revolutionize urban and regional transportation as cleaner, greener alternatives to conventional travel modes.

The chart below captures the core sustainability promises from AAM leaders like Lilium, Joby Aviation, Volocopter, and Archer.

As you can see, all these companies have built compelling narratives positioning their AAM solutions as essential to solving transportation’s environmental challenges. 

With promises of zero operating emissions, low noise levels, reduced congestion, and carbon reduction, they present themselves as frontrunners in sustainable mobility. 

But do these claims hold up under data-driven scrutiny?

Our analysis today suggests that most of these ambitious sustainability claims remain more aspirational than factual. 

In fact, current data on energy efficiency, carbon emissions, and noise pollution metrics reveal substantial gaps between the sector’s promises and its actual performance.

Interestingly, many AAM companies appear to recognize that their environmental pitches may be oversold, as seen in a notable shift in rhetoric over the past two years:

• Where AAM companies once spoke of “zero emissions,” they now emphasize “zero operating emissions.” 

• This change, likely influenced by scrutiny from industry experts, acknowledges the complexities and environmental costs associated with lithium-ion battery sourcing, production, and disposal. 

• For example, Lilium’s aircraft batteries have a high replacement rate—up to four times a year—with limited second-life applications, raising immediate sustainability questions.

Let’s dive deeper into the data to assess just how close—or far—the industry is from delivering on its green promises.

Key Argument #1: Higher Energy Efficiency

AAM companies have long positioned energy efficiency as a cornerstone of their sustainability narrative.

The argument is straightforward:

Electric-powered aircraft, like eVTOLs, convert electricity directly into movement, which is naturally more energy-efficient than traditional fossil-fuel-powered aircraft, helicopters, and internal combustion engine (ICE) cars.

However, a closer look at the data reveals a more nuanced picture.

• Studies from reputable institutions like NASA, the Technical University of Hamburg, the University of Texas at Austin, and the University of Michigan estimate that AAM—eVTOLs in particular—will likely consume between 0.15 and 0.25 kWh per passenger kilometer under real-world conditions.

• While this may seem efficient on the surface, comparing eVTOLs to their future competitors—especially electric cars for urban mobility and high-speed trains for regional trips—raises serious questions about their environmental advantages.

For context:

• High-speed trains such as Germany’s ICE consume around 0.05 to 0.15 kWh per passenger kilometer. 

• This makes them significantly more energy-efficient than eVTOLs, which consume roughly two to three times more energy for the same passenger distance.

• The average electric car (e.g., a Tesla Model 3) uses around 0.12 to 0.20 kWh per passenger kilometer, so on par with future eVTOL, if not lower.

Given these numbers, eVTOLs seem to offer no clear efficiency advantage for urban travel compared to electric vehicles.

In all fairness, AAM companies prefer to compare their projected energy efficiency with that of traditional gas-powered vehicles and commercial airlines, in which AAM may indeed appear to win—see the chart above.

The problem, however, is that these comparisons will likely be irrelevant by the time AAM is widely adopted.

Looking ahead a decade (the time horizon for AAM’s realistic entry into the mass transport mix), EVs will have largely replaced traditional ICE vehicles.

Similarly, the comparison to commercial airlines (e.g., a Boeing 737 or Airbus A320) is misleading. 

• Yes, for shorter distances, such as 500–1,000 km, commercial planes typically consume between 0.42 and 0.50 kWh per passenger kilometer, meaning that eVTOLs may offer an efficiency advantage here. 

• However, eVTOLs are unlikely to serve as direct competitors to commercial airline services, which are focused on much longer distances that AAM, even under ambitious advancements in battery density, will not realistically reach in the foreseeable future.

In summary, the supposed energy efficiency advantage of AAM—especially eVTOLs—isn’t supported by data.

Instead, what AAM contenders like to ignore mentioning is that their vehicles face inherent energy efficiency challenges due to the physics of vertical takeoff and landing. 

• Unlike fixed-wing aircraft, which generate lift through wings, eVTOLs rely on rotors to lift the aircraft. 

• This vertical takeoff and hover capability, while highly versatile, requires significant energy—especially during takeoff, hovering, and landing. 

• These demands add considerable energy costs compared to continuous cruising.

Key Argument #2: Lower Carbon Emissions

The energy efficiency challenges naturally extend to carbon emissions. 

Simply put, the carbon output associated with eVTOLs is largely influenced by the type of energy source powering them. If eVTOLs were powered entirely by renewable energy—such as solar or wind—they could, in theory, achieve near-zero operational carbon emissions. 

However, the reality of today’s energy mix, which still heavily relies on fossil fuels in most regions of the world, places eVTOL emissions between 50 and 120 grams of CO₂ per passenger kilometer, depending on the grid’s carbon intensity.

To get a clearer picture of what these figures mean, let’s compare these numbers with those of eVTOL’s direct and indirect transport competitors again:

• High-speed trains (e.g., ICE in Germany) emit approximately 30 to 40 grams of CO₂ per passenger kilometer, benefiting from their ability to carry large numbers of passengers simultaneously. This makes them significantly more climate-friendly than potential eVTOLs.

• Using Europe’s current average energy mix, electric vehicles emit around 50 to 70 grams of CO₂ per passenger kilometer, depending on variables like vehicle efficiency and passenger load. This puts them roughly in line with, or on the lower end of, potential emissions for eVTOLs.

The takeaway is clear: from a carbon emissions standpoint, eVTOLs currently also fall short of providing any meaningful climate advantage.

As with energy efficiency, the only transport modes that eVTOLs would theoretically outperform in carbon emissions are non-competing transport options like conventional gas-powered cars or short- and long-distance commercial flights. 

However, as we noted earlier, these comparisons are mostly irrelevant given the likelihood that conventional cars will be replaced by EVs in the mid-term future and that AAM’s role in commercial airline travel will be minimal.

Key Argument #3: Minimal Noise Levels

Noise “pollution” is increasingly being considered a critical part of the sustainability discussion, as it significantly impacts public health and quality of life. 

Noise from transportation has been a major public concern for years—think about the debates surrounding urban traffic noise, flight movement restrictions near airports, or community campaigns against rail track noise. 

With the expansion of urban mobility solutions into the air, noise reduction is considered a crucial benefit of AAM vehicles, especially in densely populated areas, at least when we believe press releases by many air taxi contenders.

So, where do eVTOLs stand in this noise comparison?

• eVTOLs are engineered to be quieter than traditional helicopters. But they are still expected to emit around 60-70 dB during takeoff and landing, with noise levels dropping below 40 dB during cruising. 

• While this would indeed be a major improvement over helicopters (their noise levels typically range between 85 and 100 dB), it’s still a source of noise pollution in urban environments—especially during the more frequent takeoff and landing phases. 

• And as most projections envision eVTOLs being deployed within city limits and near residential areas, noise may become a significant issue if they are scaled up.

Comparing these noise levels with other modes of transportation highlights these challenges:

• Unlike eVTOLs, electric cars are virtually silent, producing minimal noise at low speeds and only modest levels during acceleration. As the primary competitor in urban transportation, electric cars have a clear edge here (again).

• While not silent, high-speed trains are typically routed outside dense residential areas, reducing their impact on urban noise levels compared to a fleet of eVTOLs operating within city limits.

Long story short: While eVTOLs are indeed quieter than helicopters and other conventional aircraft, they are still louder than their likely future competitors in urban mobility—particularly electric cars. 

Takeoff and landing phases remain the biggest noise challenge for eVTOLs, undermining their noise reduction appeal. 

So, if eVTOLs are going to be deployed on a large scale within city limits, noise pollution could become a considerable concern, particularly in residential zones. 

As such, the noise argument, much like the carbon and energy efficiency arguments, does not provide the compelling case for AAM adoption that their advocates are pushing for.

Scoring the AAM Sustainability Dimension

While AAM has long presented an intriguing vision for the future, our analysis shows that it has yet to deliver on its sustainability promises in a meaningful way. 

• As of 2023, AAM’s sustainability score stood at 1.5 out of 5 (up slightly from the previous year), a modest improvement that reflected the cautious optimism we had around potential advancements. 

• However, current 2024 estimates reveal an industry still falling short across all major sustainability indicators.

Based on these findings, we’re reducing the sustainability rating back to 1.

While AAM may offer emissions reductions over traditional aviation and internal combustion vehicles, it underperforms in critical areas such as energy efficiency, emissions, and noise, with limited progress made to date.

For AAM to secure a place in the future transportation ecosystem, it must deliver substantial, additional benefits to counterbalance its sustainability gaps. These could include significant time savings, enhanced urban or regional connectivity, or innovative services that traditional ground transportation cannot match. 

Without these added value propositions, AAM will likely struggle to achieve widespread adoption based on its current emissions profile.

(8/8) The Final Chapter: Public Desirability of Air Taxis

It’s now time for the concluding chapter of our AAM Series. Let’s turn to the final piece of the industry-readiness puzzle: public desirability.

Put simply, public desirability asks one critical question: Will people embrace the idea of traveling in future air taxis? 

If yes, why and how often? 

And for those not willing or able to afford these trips, will they accept AAM vehicles flying over their heads?

These questions are not merely academic; they have profound implications for the future of the AAM sector.

• History has repeatedly shown that new transportation innovations often face significant public resistance in their early stages.

• This resistance can persist even when the new mode offers clear advantages.

Consider the rollout of shared e-scooters, bikes, ride-hailing services, or even electric vehicles. Despite their benefits—such as reducing emissions or offering greater convenience—they were met with skepticism, public criticism, and, at times, outright opposition.

Some concerns were valid, such as infrastructure misalignment and safety risks, but others stemmed from cultural or behavioral resistance to change.

For AAM, the stakes are even higher.

• Air taxis won’t just disrupt ground-level transportation—they’ll introduce a wholly new element to urban environments, potentially hovering above city centers and suburban neighborhoods.

• This raises complex questions about safety, noise, privacy, and visual impact.

As a result, public desirability will ultimately be mission-critical for the widespread adoption of AAM. Without societal buy-in, even the most advanced technology and robust infrastructure won’t matter.

But there’s another critical factor influencing desirability: affordability.

• Will AAM be accessible to a broad demographic, or will it remain an exclusive luxury for the ultra-wealthy, similar to private jets or helicopter services?

• If so, how much will AAM advocates be willing to pay for these services?

• And if AAM services are priced out of reach for the average traveler, what does this mean for public acceptance?

To provide greater clarity on this front, we’re excited to share insights from what we believe to be one of the first—and possibly the only—comprehensive willingness-to-pay surveys in the AAM sector to date.

Conducted in collaboration with our parent company, Lufthansa Group, in April of this year, this study surveyed thousands of Lufthansa frequent flyers to understand their motivations, preferences, barriers to adoption, and willingness-to-pay for potential AAM services.

Let’s unpack these findings to shed light on whether AAM can meet the expectations of the traveling public and gain the societal buy-in it needs to take off.

Public Desirability in the Media Spotlight

Before diving into the specifics of traveler attitudes toward AAM, let’s briefly take a high-level look at how public desirability has been evolving as a topic of public discourse.

• From a birds-eye view, the growing attention around customer acceptance of AAM—particularly air taxis—can be clearly observed in global media coverage. 

• In fact, the number of top-tier news stories covering the “acceptance” of air taxis has grown substantially, from 188 articles in 2019 to an estimated 413 stories in 2024—a 120% increase over five years.

This sharp rise in media coverage indicates a growing global conversation around AAM, emphasizing both the opportunities and challenges of achieving widespread public acceptance. 

The content of these stories is equally revealing, often focusing on themes such as:

• Articles highlight surveys showing how many people in key markets, such as the UK, are aware of the concept of “flying taxis” and whether they see them as a viable transportation option in the future.

• Many media reports emphasize public concerns over potential noise pollution from air taxis, a critical factor influencing urban desirability.

• Numerous pieces also cite research into how much trust people are willing to place in fully autonomous or semi-autonomous air taxis and their trust to step into one.

This growing body of media attention reflects the rising importance of public desirability in shaping the future of AAM. It’s clear that AAM providers not only need to innovate in technology and business models but also address the social and psychological factors that will determine whether these services gain widespread acceptance.

With that context in mind, let’s dive deeper into the specific elements driving public desirability.

Defining the Scope: Prioritizing Desirability Among Frequent Flyers

Before diving into the data, it’s essential to clarify the scope of our analysis.

While public acceptance is undeniably critical in shaping broader societal sentiment around AAM, this specific analysis focuses on desirability among what we consider AAM’s primary target customer base: frequent flyers.

For the sake of brevity, we’ve chosen to deprioritize the perspective of the general public in this report—though we acknowledge its importance in influencing regulatory and community acceptance.

Instead, our survey exclusively targeted frequent flyers and asked respondents a series of questions aimed at providing a detailed understanding of their motivations, barriers, and preferences regarding AAM.

The survey explored five key areas:

• Demographics and travel habits – Who are these potential customers, and what are their current travel patterns?

• Awareness and initial perceptions – How familiar are they with the concept of AAM, and what is their initial reaction?

• Willingness to use and pay for AAM services – Specifically focusing on two use cases: Airport Shuttle and Regional Airport Shuttle services.

• Willingness to change behavior regarding luggage transportation – How adaptable are customers when it comes to modifying their existing travel habits to accommodate AAM?

• Likelihood of switching to an AAM shuttle service – What would it take for them to replace their current modes of transportation with AAM?

Armed with these insights, we’ve identified three key takeaways that highlight the opportunities and challenges for AAM adoption among this critical audience.

For a more granular breakdown of the results, feel free to reach out to us directly via reports@tnmt.com—we’d be happy to share additional details.

Key Insight #1: Strong Interest in AAM for Airport Transportation

Our survey revealed a promising level of interest among frequent flyers for AAM services as a new airport transportation option.

When asked about their likelihood of switching from traditional ground transportation methods (e.g., taxis, public transit, or private vehicles) to a hypothetical Lufthansa AAM City or Regional Airport Shuttle Service, an impressive 70% of respondents indicated they were either “very likely,” “likely,” or “rather likely” to make the switch.

This strong level of interest suggests solid demand for AAM services, likely driven by the suboptimal nature of current transportation options to and from airports.

• Even more notably, 22% of respondents—so more than one in five—stated they are “very likely” to switch to AAM services.

• These enthusiastic early adopters might represent a critical segment for AAM providers as their engagement could help build initial launch momentum for these services, accelerating broader public awareness and acceptance.

In summary: Frequent flyers’ positive sentiment is a promising sign that they could become AAM’s most vocal advocates—provided the service meets or exceeds their expectations.

This brings us to our next question: What specific elements make up AAM’s value proposition in the eyes of frequent flyers?

Let’s explore these drivers in Insight #2.

Key Insight #2: Motivators and Barriers to AAM Adoption

Our survey delved into what motivates frequent flyers to consider AAM services for airport transfers and what factors might deter them. 

The results reveal both opportunities and challenges for AAM providers aiming to win over this critical target group.

When asked about their reasons for switching to AAM services, frequent flyers identified three primary motivators. 

• Leading the list was time savings, cited by 25% of respondents. This highlights that potential users are drawn to the promise of faster airport transfers and regional commutes. 

• Sustainability emerged as the second most important motivator, with 10% of respondents emphasizing their preference for environmentally friendly transportation options. 

• Comfort and experience followed closely, also mentioned by 10% of respondents, reflecting the appeal of a more premium travel experience.

Together, these three factors offer a clear roadmap for AAM providers to define their value proposition.

However, upon closer examination, two of these motivators—time savings and sustainability—present significant challenges when tested against real-world data.

• For example, our Route Attractiveness Analysis of 42 cities across the U.S. and Europe revealed that the time savings offered by AAM services are often negligible, if existent at all. 

• Similarly, the sustainability argument is undermined by current environmental realities. As discussed in our previous chapter, first-generation eVTOLs will consume more energy per passenger kilometer than electric cars or high-speed trains. Without exclusive reliance on renewable energy sources—unlikely under today’s energy mix—AAM vehicles fail to deliver the carbon reduction benefits they claim. 

This disconnect between expectations and feasibility challenges AAM’s core narrative, leaving comfort and experience as the sole unchallenged motivator—a factor that, while appealing, is unlikely to drive mass adoption on its own.

In addition to these challenges, the survey highlighted significant barriers to adoption, with cost and price identified as the top concern by 19% of respondents. 

This finding brings us to our next critical question: What price point would make AAM services viable for frequent flyers, and how do these expectations align with financial realities?

Key Insight #3: AAM’s Pricing Mismatch

The most revealing insight from our survey focuses on the average willingness to pay (WTP) for air-taxi use cases, such as city-center to airport as well as regional airport transfers. Knowing how much frequent flyers would be willing to pay offers critical guidance for AAM providers in positioning their services effectively.

To calculate WTP, we asked respondents to evaluate ticket prices for typical airport trips across a spectrum—from what they would consider “cheap” to “expensive” and, finally, “too expensive.” For instance, a $1 ticket was unanimously deemed “cheap,” while no respondents categorized it as “expensive” or “too expensive.”

This approach allowed us to pinpoint key intersections where perceived affordability aligns with perceived value. These intersections reveal the average willingness to pay—the price point at which respondents are indifferent to the cost—and the marginal expensiveness threshold, where most respondents feel the price is nearing their upper limit of acceptability.

The findings are striking:

• The average WTP for a combined city-to-airport and regional-to-airport trip stands at about $100 USD at the indifference price point.

• The marginal expensiveness threshold sits slightly higher at $105 USD.

These numbers suggest that to capture the majority of frequent flyers, AAM services should aim to price tickets within this range to achieve critical adoption levels.

Early Adopters vs. Mainstream Adoption

However, it’s important to consider the unique dynamics of the early adoption phase. During this period, AAM services will operate at limited supply, targeting a niche audience with greater price insensitivity.

• The survey highlights a small but significant subset of respondents—approximately 20%—who would be willing to pay above $305 USD for a combined city-to-airport and regional-to-airport trip. 

• This aligns with the current pricing strategies of high-end helicopter operators like Blade Urban Air, which charges similar rates for its JFK-to-Manhattan shuttle service. 

• For AAM providers, focusing on this high-income, price-insensitive group could be a viable strategy during the initial commercial phase.

The Long-Term Pricing Challenge

In the long run, however, AAM services will need to lower prices to reach a broader audience of frequent flyers. This poses a significant challenge, given the current cost structures associated with eVTOL operations.

When we compare the WTP results to industry cost projections, the gap between what frequent flyers would be willing to pay and what air-taxi services are expected to cost becomes apparent.

For short airport transfers and longer rural trips, the disparity between WTP and anticipated costs highlights the economic hurdles that AAM contenders must overcome to achieve widespread adoption. 

Bridging this gap will require rapid advancements in economies of scale, operational efficiency, and technological innovation. Without these outcomes, AAM risks offering an ultra-exclusive service rather than a commercially relevant transportation solution for mainstream business travelers.

Scoring the AAM Desirability Dimension

With these insights in mind, it’s time to assign the final score in our year-long AAM Readiness Radar series.

The significant pricing mismatch—even among frequent flyers, who are generally more price-insensitive and financially well-off than the average traveler—presents a major hurdle for AAM, specifically for eVTOL air taxis, to launch a viable business model.

This challenge undermines overall desirability and impacts broader public sentiment, which we did not fully address in this chapter but remains an essential factor. Overpriced, elite transport services will inevitably struggle to gain widespread public acceptance.

As a result, we are adjusting the public desirability rating from 1.0 to 0.5, reflecting a modest decline.

With this final assessment, our AAM Market Readiness Radar is now complete.

As shown in the final visual, the overall state of Advanced Air Mobility as we approach 2025 looks far less promising than we had anticipated when we began our AAM research journey earlier this year.

While there has been meaningful progress in areas such as regulation and ecosystem development, many AAM contenders have failed to keep pace—particularly in delivering on the core promises of faster, cleaner, and cost-competitive solutions that could realistically take to the skies before the end of this decade.

These value propositions remain out of reach, at least for the foreseeable future.

For now, we’ll step back from the sector until significant progress convinces us to revisit it.
Until then, we stand by the projection we made nearly five years ago: Commercially relevant AAM vehicles are highly unlikely to take to the skies before the end of this decade.