With the dust having settled on another Farnborough Airshow, I can’t help thinking of the famous French maxim “plus ça change, plus c’est la même chose” (the more things change, the more they stay the same). Any hope that the passenger eVTOL industry had begun descending from the Gartner hype cycle’s “peak of inflated expectations” was quickly dashed by the repetition of claims that defined the SPAC boom of the early 2020s. “Heathrow to central London in eight minutes”, for example, was the pitch Joby Aviation and Virgin Atlantic made to assembled media as they put pen to paper on an agreement to bring so-called “air taxi” services to the UK at a glitzy signing ceremony.
And you might ask, what’s wrong with that? Well, nothing on the face of it. The problem isn’t that Heathrow to central London in eight minutes is impossible – helicopters have been doing exactly that for decades. The problem is that airport helicopter shuttles remain a niche product because they cost a lot. A hell of a lot. Yet the eVTOL industry likes to keep telling people that a short hop on one of their new toys will be the same as an Uber, conveniently ignoring the huge contribution to cost-per-available seat mile (CASM) that airport landing fees represent. There’s been some great analysis of CASM of late – and we’ll throw our hat into the ring on this in an upcoming post – but for now I want to examine what happened the last time aviation promised a transport revolution of this kind.
Sometimes, the best way to predict the future is to heed the lessons of the past. In aviation, there is one particularly clear analogue to where the passenger eVTOL space currently finds itself: the very light jet, or VLJ. The first parallel lies in the underlying vision itself. Back in the early 2000s, a wave of new OEMs predicted that small, inexpensive and efficient jets would transform regional and on-demand air travel, making point-to-point flying accessible to a much broader customer base. Investor enthusiasm was high, aircraft development progressed rapidly, and several OEMs entered production. Yet while the VLJ category endured, the air taxi operations that were expected to underpin its mass utilisation never materialised.
As is the case today, the main challenges proved to be economic and operational rather than technical. Early VLJ operators overestimated utilisation rates and underestimated the complexity of repositioning aircraft to meet dynamically generated demand. Fleet efficiency was poor, empty-leg flying was high, and financial models broke down quickly. DayJet – the best-known casualty – launched in 2007 promising mass-market, per-seat, on-demand flights. Despite strong technical execution and early support from NASA and Eclipse Aviation, the company ceased operations within a year after exhausting its capital.
Putting expected operating costs to one side (as mentioned, we’ll tackle this in upcoming analysis), a second parallel lies in acquisition cost expectations. VLJs ultimately proved only modestly cheaper than many existing light jets – far from the step-change many had promised. Optimists envisaged jets priced little above piston singles and below turboprops, enabling thousands to enter an on-demand taxi network. Instead, pricing landed close to existing aircraft, eroding the case for widespread fleet deployment. The same scepticism is warranted in passenger eVTOL. Archer, for example, has announced an order book running into the thousands of Midnight aircraft, each valued at around $5 million. That exceeds the price of the Airbus H130 and H125 helicopters – workhorses of global sightseeing and short-haul charter – and sits only just beneath twin-engine executive models like the Leonardo AW109. For broadly the same outlay, buyers could instead acquire a pre-owned AW109 or Bell 429, both proven platforms with greater range, payload flexibility and multi-role capability. Economies of scale may reduce eVTOL pricing over time, but early adopters may find that the economic advantage over conventional helicopters is far less pronounced than hoped.
The third major lesson from early VLJs was the belief that they would create an entirely new air taxi market where none previously existed. That notion was flawed from the outset because an on-demand charter industry has been around for decades and continues to this day. The air taxi business has long waxed and waned with economic cycles, but, as alluded to earlier, it is well established and highly diversified. Every kind of aircraft, from light piston singles to long-range Gulfstreams, is available for charter, as are helicopters serving mature urban air mobility markets. Yet despite this infrastructure and experience, scheduled VTOL air services remain remarkably limited. In North America, examples include BLADE, connecting Manhattan with New York’s airports, and HeliJet between Vancouver and Victoria. In Europe, BLADE again operates between Nice and Monaco, while Castle Air Aviation Group runs the London Helishuttle service between Battersea and Stansted, and Hélity Copter Airlines connects Ceuta with the Spanish mainland. The question, therefore, is not whether air taxi operations can exist, but why so few have proved commercially viable, and what this implies for the scalability of future passenger eVTOL networks.
Source: Valour Consultancy
Forecasting mistakes further compounded VLJ disappointment. As we’ll happily testify at Valour, predicting the future is difficult in any business, but prophesying the direction aviation will move in has proven particularly inaccurate throughout history. From the post-war general aviation boom that never occurred to the commercial aviation market teetering on the brink of collapse in the mid-1980s following a period of sustained growth during the previous decade, forecasters have repeatedly misjudged economic cyclicality and overstated the pace at which new technology would translate into sustainable demand. With the benefit of hindsight, we can now see how early predictions for the VLJ market actually turned out.
For passenger eVTOL, the lesson is clear. While the aircraft may promise quieter and cleaner operations, their success will ultimately hinge on realistic assumptions about utilisation, operating costs and capital requirements. These factors are all explored in our recently published report, The Future of Advanced Air Mobility, but the key takeaway is that the VLJ experience demonstrates that even when the technology works, business models built on overly ambitious demand forecasts rarely do.
We would do well to look back to those who proved prescient, such as J. Mac McClellan, author of the 2006 article VLJ Myth May Cost Us All, who wrote: “New light jets and VLJs will certainly enter the market over the coming years, but they will simply be an alternative, not a revolution.”
I suspect that this will prove to be the defining lesson for passenger eVTOL as well. If so, it may also explain why an increasing number of OEMs appear to be recalibrating their ambitions, with military and defence applications emerging as a more realistic route to near-term revenues than mass-market passenger air taxis. That’s a trend we’ll examine in another upcoming blog.
