The Perfect Storm

👋 I’m Kolin, based in the lovely city of Hamburg, and passionate about innovation and tech, specifically everything that shakes up the aviation industry.

I will be sharing a curation of the 🔥 hottest 🔥 trends and developments in the broader aviation industry, covering generation-defining trends shaping and disrupting our future of air mobility. The AeroTechPulse will be distributed bi-weekly, centering on the broader sustainable aviation space, incl. deep dives on advanced air mobility aka. air taxis.

🚀 Trending.

Stock market collapse, inflation, rising interest rates, record low consumer sentiment ...

Similar to other industries, Advanced Air Mobility is also struggling with the economic downturn and the resulting difficulties, such as the closing of further financing rounds.

Two weeks ago, I gave a keynote on this very topic at Volocopter's "Vertiport Experience" event, including recommendations on what companies need to focus on to safely weather the storm. My keynote included four key messages.

1) 𝐁𝐞 𝐭𝐡𝐞 $𝐜𝐫𝐨𝐨𝐠𝐞 𝐌𝐜𝐃𝐮𝐜𝐤: Focus on cash containment initiatives, and begin early in the fundraising process to have a long cash-runway; ideally at least until the macroeconomic situation improves. Moreover, diversify the business, targeting pre-revenue business opportunities.

2) 𝐁𝐞 𝐭𝐡𝐞 𝐅𝐮𝐭𝐮𝐫𝐞 𝐒𝐨𝐥𝐯𝐞𝐫: Proactively address future challenges today; otherwise the Advanced Air Mobility industry will not be able to realize its full market potential. For example, addressing the pilot shortage, the need for physical infrastructure (as higher density means higher utility), and affordability.

3) 𝐁𝐞 𝐭𝐡𝐞 𝐌𝐨𝐛𝐢𝐥𝐢𝐭𝐲 𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: Travelers need to save at least 20% of travel time for air taxis to be competitive with other transport modes. Hence, build a solution not a product. The mobility solution of the future must be intermodal and end-to-end digitally connected.

4) 𝐁𝐞 𝐭𝐡𝐞 𝐄𝐜𝐨𝐬𝐲𝐬𝐭𝐞𝐦 𝐎𝐫𝐜𝐡𝐞𝐬𝐭𝐫𝐚𝐭𝐨𝐫: Advanced Air Mobility is a system of systems which requires close collaboration across all ecosystem building blocks. Hence, be a proactive orchestrator that builds partnerships between ecosystem building blocks and quickly sets up sandboxes for experimental testing.

I further received feedback and further additional points from the AAM community on above key messages - many thanks for this: The main feedback was that the AAM firms most likely need to prioritize by selecting one or two areas from above four messages, given their cash constraints. Most stressed the points #1 and #4 to be critical, followed by #3 to develop a mobility solution that has a product-market fit.

What are your thoughts? Please share or reach out!

You can also access my full keynote by clicking here "Keynote Slide Deck"

🛫 Driving the Conversation. The Top Reads.

Top 1: The next airline, Transavia, invests in electric aircraft startup Lucy. With this investment, the airline will make sustainable electric flying accessible to consumers in the future. Lucy will offer its first electric flights from Eindhoven Airport in 2025. A completely new ecosystem of universities, start-ups, corporates and aircraft manufacturers are joining forces. Lucy starts with 5 seater e-planes with a range of about 250 km. The ambition is of course larger e-planes with a greater range. First as a replacement for the existing regional aviation and eventually integrated into the current route network of the commercial aviation companies. The startup develops a product that will first target the business traveler; moving to leisure market at a later stage.

Top 2: The early stages of next-gen regional aircraft landscape takes shape. Much like AAM competitors, new regional aircraft OEMs recognize the transformative opportunity afforded by new technologies. Nearly all concepts are fixed-wing, conventional or short take-off designs that provide greater range, reduce or eliminate emissions, use existing infrastructure, and should be easier to certify relative to typically more complex eVTOLs. The space will most likely become even more crowded in the foreseeable future.

Top 3: Lilium provides more insights on its cash position and aircraft development in its earnings call. Next point, with regards to the batteries, the test results on Lilium's prototype battery sales gives them confidence that the batteries they plan to use inside of their production aircraft at launch will deliver not only the required energy density, which is important for the range, but also the power density and also will have the required aging performance. Lilum has signed Memorandum of Understanding agreements in the premium segment for a total of 113 aircrafts in key location with high demand, including GlobeAir, their latest announcement. This brings the overall number of Lilium Jet under MoU to 483. The total cash spend of €63 million in Q2, 2022 was in line with the previous quarter with the spend of €60 million. Lilium expects full year 2022 total cash spend to be no more than €250 million. The liquidity as of June, 30, 2022 stood at €229 million. Additionally the €75 million equity line of credit facility established with Tumin Stone Capital became effective on June 24, 2022.

Top 4: Air taxi firms establish experimental vertiport labs. Volocopter conducted a test flight at the beg. of October at the airport of Rome. Following, the firm which is in partnership with UrbanV, hosted a vertiport demonstration and experience event. Similarly, Joby Aviation and Skyports announced to establish a "Living Lab" to gain insights into the passenger experience at vertiports and how to improve the customer journey.

As Joby stated: “Our all-electric vertical take-off and landing aircraft is set to revolutionize the way we travel in and around cities. Joby riders will skip the traffic, flying directly to their destination at over 200 mph,” said Joby Head of Product Eric Allison. “But to realize the vision of everyday flight, we need to deliver a seamless and more rapid experience on the ground. The Living Lab will allow us to rethink the terminal experience, keeping our customers front and centre throughout their entire journey.”

“We expect the Living Lab to be instrumental in our efforts to engage regulators, government officials, and the public to demonstrate the benefits of electric vertical take-off and landing operations and promote acceptance of this new form of mobility,” said Skyports CEO Duncan Walker. “Our aim is to develop vertiport infrastructure that delivers a ‘zero-wait’ check-in experience for customers, and we’re delighted to be working with Joby, one of the leading companies in this sector, to prepare for that future.”

Top 5: The practical vs. impractical and sexy vs. unsexy aviation segments. Michael Barnard (known to be not a big fan of eVTOLs) has published another piece on the broader aviation space, clustering the various segments by practicality and sexiness levels. He argues that there is a lot of nonsense that receives funding but is not serving a benefit nor addressing the challenge of combating climate change. Then there are areas that are needed but receive less attention and not attracting enough funding. It's an interesting piece worth reading. What are your thought on this article? Please comment below.

Top 6: The unexpected reasons to invest in Advanced Air Mobility. Once dominated by startups, the emerging air taxi industry has attracted the attention of traditional aerospace companies that have invested millions of dollars. Some have also begun working on their own concepts for these small, electric passenger aircraft. Even if AAM never achieves the billion- or trillion-dollar annual valuations predicted by analysts, the Airbuses and Boeings will still reap the benefits, which rests on the following rationales:

(1) AAM is attracting attractive talents that aviation and aerospace needs

(2) AAM is staying at the cutting-edge of new technologies (e.g., autonomous operations) that will disrupt the entire aviation and aerospace industry in the future

Observers may think that traditional aerospace OEMs are trying to leverage the AAM investment bubble solely to boost their stock price and for marketing, but these are practical reasons and potential benefits that greatly outweigh the risk that this market may never be financially viable. Despite the cynicism, targeted and limited investments in AAM projects are worth doing.

Top 7: The Jetson world will start with parcels, not people. A provocative opinion piece from Bloomberg on the Jetsons of this world, and that we will first experience cargo delivery to take off. The world of George Jetson hinges on some rather large leaps of faith. The biggest of those is whether passengers will eventually be willing to board an aircraft with no pilot on board (the first versions will be piloted). Will the public accept having automated aircraft fly above their heads? Will the price drop to make it more appealing to a broader audience? When flights are automated, the economics of the aircraft go up exponentially. The price point for passengers — those willing to trust a computer to navigate — could come down enough that the service could very well break out of the niche market. The practical and more mundane test for these aircraft — known as electric vertical take-off and landing, or eVTOL — will start with cargo. There will be buyers of passenger eVTOLs, but probably not enough to support all the startups that are chasing the dream. Whether this stays as a niche market for the well-heeled to brag about how green they fly or whether it will go more mainstream will depend on resolving a host of complex details. Long before that happens, though, these aircraft will most likely be ferrying cargo.

Top 8: Delta funds electric air taxi maker Joby to quicken travel to airports. The chaff continues to separate from the wheat! Congrats to Joby Aviation for receiving $60 million from Delta Air Lines with up to $200 million to come if certain unspecified milestones are met. Delta to offer customers "home-to-airport"-service with Joby being the operator and Delta providing the infrastructure (= this is massive and one of the great benefits for Joby). Airport service partnership exclusive in the U.S. and U.K. for five years after commercial launch

Delta provides seamless booking and travel experience: (1) Passengers can add their trip with a Joby while booking a flight, (2) Uber will be used to get the pax to the vertiports, (3) Delta customers will be using digital identity tech at airports, (4) Delta working to install security for Joby customer at airfield, (5) Vertiports closely located to Delta premium lounges.

Delta Air Lines' partnership with Joby Aviation is significant,as Eland Head from the Air Current has delved into the fineprint of the deal, providing very interesting findings. Read here.

Top 9: XPeng conducts test flight in Dubai. Chinese automaker Xpeng is another step closer to launching its flying car internationally, with it completing its first public test flight in the United Arab Emirates. The 90-minute flight of the X2, a two-seater electric vertical take-off and landing (eVTOL) aircraft, was hosted by the Dubai International Chamber and supported by Dubai Civil Aviation Authority, Dubai Department of Economy and Tourism and Dubai World Trade Centre Authority. It took place at Skydive Dubai and was witnessed by over 150 spectators and guests. The X2 features a teardrop-shaped structure that’s made completely of carbon fibre to maximise its aerodynamic efficiency. It’s lifted by a total of eight propellers, two on each corner, and doesn’t produce carbon dioxide during flight. The aircraft also includes two driving modes: manual and autonomous. The former lets riders pilot the flying car themselves, while the latter lets the onboard software do all the heavy work. The test flight marks the first time China’s manned autonomous flying car has completed its operational risk assessment overseas. Xpeng Aeroht is also the first company to pass the assessment in Dubai in this specific weight class.

Top 10: Wisk is going full robot with its electric air taxi while competitors stick with human pilots. Most air taxi developers are betting that safety regulators will be more comfortable approving their cutting-edge aircraft if there’s a pilot in the cockpit, at least to start. Wisk Aero is going in the opposite direction. It’s sticking with an ambitious plan to go autonomous from the beginning. Hence, the question is: Who is running in the wrong direction? Wisk acknowledges that will take it longer to come to market. Competitors Joby Aviation and Archer Aviation are aiming to launch in 2024. Wisk isn’t sharing its target date publicly but the Mountain View, Calif.-based company believes the new aircraft, which it hasn’t begun to flight-test yet, will be carrying passengers before the end of the decade. Wisk is planning for its air taxi to fly autonomously along pre-planned flight routes under the supervision of an employee in a ground-control station who will oversee up to three aircraft simultaneously. Everyone agrees that to operate air taxis profitably, the pilot needs to be removed from the cockpit. For this happen, from a regulatory point and (especially) customer acceptance view, will most likely take very long. Hence, Wisk needs a long runway until take-off including the required resources. Boeing probably has to inject even more cash in the future.

🤑 Noteworthy [VC] Transactions, Partnerships, and Other Deals.

Mayman Aerospace [Funding] receives $1.25 million from USAF's Agility Prime

ZeroAvia [Acquisition] acquired the leading fuel cell stack innovator HyPoint

Spexi [Funding] raises $5.5 million for their drone platform

Kite Magnetics [Funding] raises $1.85 million for the development of a new generation of smaller, lighter and more efficient electric motors for aviation

Joby Aviation [Funding] receives $60 million from Delta Airlines

H55 [Funding] raises an undisclosed amount from RTX Ventures to advanced electric propulsion technologies for clean and efficient air mobility applications

Surf Air [Funding] signs $450 million funding commitment with leasing group Jetstream

Flexjet [Funding] plans to go public by merging with Horizon Acquisition at a valuation of $3.1bn

Sierra Nevada [Acquisition] buys drone maker Volsani after VC funding dries up

Lucy [Funding] receives and undisclosed amount of funding from Transavia

Aura Aero [Order] receives 130 new orders for hybrid-electric ERA

Heart Aerospace [Order] signs LOI for up to six ES-30s with Sevenair

Electra Aero [Order] signs LOI for 50 eSTOL aircraft with MINTAir

EVfly [Order] signs LOI for three AXE with an option for five more with Skyfly

Jetstream [Order] signs LOI for up to 250 hybrid and fully-electric powertrains from Surf Air Mobility over the course of five years

🙏 End Note.

I hope you enjoyed Kolin’s AeroTechPulse. The next edition will be published in three weeks, always on Monday - so stay tuned and hungry 😋.

Feel free to connect on LinkedIn and reach out in case of questions, feedback, and/or discussion on the topics.

Cheers,

K

# 🕊️ Live today, love tomorrow 🌍 #

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👉 This is a curated newsletter. The ideas, views, and opinions expressed are taken from the respective news articles aka. authors and do not represent my own or the ones of my current employer 🚨