Has this ever happened to you? You click on the Lyft or Uber app to order a car and see that one is 5 minutes away. Ten minutes later, it’s still 5 minutes away. Urban traffic—whether in a densely packed city like New York or a sprawl like LA—can be brutal. How great would it be to fly over all that, across the city or even out to the suburbs?
That promise has attracted billions of dollars of investment in a host of air taxi startups, some of which have been working for over a decade to build small electric planes for urban rideshares and inter-city commuter hops. It’s a slow process, but there are new promising signs that these flying cars will arrive soon—at least in other countries.
Recently, the United Arab Emirates announced a huge investment in U.S. air taxi startup Archer Aviation for service to start as soon as 2025. (Although all the parties would name for a figure was “multi-hundred-million dollar investments.”) It follows on a deal with Archer’s chief rival, Joby Aviation, providing exclusive rights to fly around the biggest city, Dubai, by 2026. Nodding to that progress, Joby has said that the UAE will likely be the first place it starts service, and Archer has hinted at the same. Both companies have big plans for the U.S., but they rely on approvals from a beleaguered FAA that has already been chastised by the Department of Transportation for dragging its feet in this sector.
Is the Public Ready for Air Taxis?
Even if and when the U.S. government approves these aircraft, will the public approve? Using efficient electric motors, they promise to be far quieter than gas-powered planes and helicopters (which some, like Joby, have actually proved in flight tests). But it’s still a challenge to site or expand urban heliports—or vertiports, as electric aircraft boosters call them. The planes take off and land vertically to avoid the need for long runways. Hence the technical term for such craft: eVTOL, for eclectic vertical takeoff and landing.
And while the goal is to make these flights as cheap as a land-based rideshare, no one expects that in the first few years, as experts told Worth in our feature on air taxis last year. Independent analysts expect the cost for flight to average several hundred dollars, rather than several dozen. It may be telling that Archer recently hired two senior executives away from private jet service companies.
EVTOL Prices Should Drop
But as we observed about electric cars, prices for new technology do steadily come down, even if not as quickly as some hope. They will likely do the same for electric planes, at least to some extent. (One estimate has prices getting down to the low dozens of dollars by around 2040.) And like EV autos, EV planes have the potential to run on green electricity, making a dent in greenhouse gas emissions towards the goal of sustainable aviation.
Air taxis will probably never travel as far as gas-powered aircraft. Batteries are just too heavy and pack much less power per pound, but they can take a load off emissions from short-range flights up to about 200 miles. However, if air taxis come even close to meeting investors’ wildest dreams, they will lead to many additional takeoffs. And even the cleanest flights will have some environmental impact, such as consuming green energy that could go elsewhere.
One open question is whether eVTOL providers will subsidize their initial service, and if they will, to what extent? It’s pretty much an axiom in the high-tech consumer service industry that you subsidize your offerings for the first few years to build up market share. It’s been the MO for Uber, Lyft, and other well-funded startups. Big prospective air taxi providers have been mum on subsidizing customers. (But they are getting generous subsidies from the public, such as up to $203 million in tax credits and grants from Ohio for Joby to build its factory there.)
Lots of Funding Runway for Top Players
EVTOL’s may not need a runway, but their finances do. The top-funded startups probably do have the coffers to subsidize flights if they want to or have to. Archer ended the 2023 fiscal year with 464.6M in cash and equivalents in hand. That was before this vague new infusion from the UAE, which could be somewhere between $200 million and $1 billion. Joby reported holding $1 billion in cash and short-term investments at the end of the year. We should get more details from both of these public companies when they report their first-quarter results in early May.
With so many variables and unknowns, the net effect of air taxis will only become clear after the largely U.S.-based industry has gotten established—which may well start overseas.
