The US domestic eVTOL market should, in theory, be massive.  US air travel is mature, while road traffic grows worse with congestion increasing on decaying road infrastructure. The option of being able to literally fly over the clogged, and broken, roads should cause people to flock to a new option that is quicker and more convenient.

Readers are familiar with how the eVTOL space is attracting a lot of attention and investment dollars. There are many OEMs putting out designs and some are even attracting big orders.  A mature industry like air travel hasn’t seen anything like this since the barnstorming days.  Are skeptics’ views valid?  

A skeptical view is valid in terms of the OEMs offering aircraft – many might not survive the brutal certification process.  It is likely that many of the “orders” placed came with little in the way of hard money.  But for companies like Embraer, with a bankable history of aircraft development and certification, orders probably did come with real hard money deposits.  That is to say serious deposits.

We took a look at the size of the potential US domestic eVTOL travel market from a few different perspectives.  Then we built a model (using T-100 Domestic Segment) to supplement our findings.  We selected Small Certificated Carriers and air taxi operators to examine to provide a historic basis for the market. The model is interactive and appears below for your engagement.

On page one of the model, we show historical data from 2000 to the latest update, which provides a crucial perspective in terms of understanding travel patterns.  Notice how the number of flights under 500 miles has steadily shrunk.  An initial response is that the market is shrinking for this range.  All of the current eVTOLs and electric-powered regional aircraft won’t reach 500 miles.  Indeed most eVTOLs are better considered as taxi alternatives to fly hops across cities.  Regional airliners aim to fly further.  But 500 miles is going to be difficult to reach for some time.   This provides a sense of the big picture.

On page two of the model, we offer a reader a chance to test-drive the model by typing in a city name to look at the history of under 500-mile flights from that city.  We also list the average number of passengers on these flights.  This chart offers another perspective.  This market is going to be tough – but this is based on history.  The eVTOL market will create new options and therefore should not be seen only through the lens of history.  In the New York example listed, through November 2021 there were 504 flights with an average of 4 passengers. This averages to 1.5 flights per day – hardly the volume one can build a business on. However, that’s the history based on current technology aviation transport options. This is a point made eloquently by the former CEO of MagniX, a company planning to power many future regional aircraft. History constrains our thinking about short-haul flying.

On page three: Here we start to cut the range to a maximum of 250 miles.  This is a distance Americans think nothing of driving.  Once again, readers can type in a city name and watch the model change. The ball size is driven by the number of travelers.  At the bottom left of the model is a “play” button.  Clicking this allows the model to show market behavior over the period.  In the saved version, with New York, readers will notice that communities range in segments; <100 miles, and then roughly from 150-200 miles.   Each origin city market has its own profile, feel free to type in other cities and see how these appear. 

Page four: Here we list the traffic from the origin city to the destination by volume for distances up to 50 miles. We selected data from 2010 onward to make the data easier to digest.  The upper table lists the key markets in descending traffic order.  From New York, these are the markets one would expect to show up. Several of these markets have sustained shuttle services from the big airlines.  In the case of New York, these are established markets with lots of traffic.  The lower two tables list the types of aircraft and carriers with their average passengers per flight.

There is a lot to be learned from history, and our data model enables analysis of past performance quite easily, even down to the city pair level.  However, with a new set of technologies, the past is not necessarily prologue.  Innovations change market dynamics, and much of that innovation is driven by the value proposition.  Imagine landing at LAX and being able to take an air taxi over the crowded freeways to a local destination from Santa Barbara to Orange County.  Skimming over the red taillights on the freeway sounds wonderful.  But at what cost?  Here’s where electric propulsion comes into play.

Maintenance costs for electric motors are negligible, they have only one moving part, unlike hundreds of moving parts in conventional engines.  Further, electricity for propulsion is likely to cost less than conventional fuel for the same route, and net-zero emissions.  The benefits of this new technology will be significant.  The question is how far they could push the cost down for point-to-point services.  If the cost for a flight is similar to an Uber or taxi fare, these services should be popular.  But if they are an order of magnitude more expensive, this may become the equivalent of first-class or business jet travel – something everybody would enjoy, but few can afford to pay.  As with most innovations, economics will become the key variable in the process.

Summary:

  • The 2021 national market could support about 2,000 flights per day, based on historical data. However, the market is likely to be regionally focused around the major metro areas.  The only regional area looking promising would be the US northeast between Washington DC and Boston.

    • Market entrants might want to focus on the US northeast as a starting location as it offers the most market opportunities along with some of the worst roads and limited rail options.
    • But if the price is right, many other locations could be possible.
  • eVTOL activity might resuscitate a market that has been shrinking.  eVTOL services might present a business opportunity for anyone able to withstand market hesitancy and who has the patience and deep pockets as the market “learns” about a new travel option.
  • The model shows key markets for each origin city.  As page three illustrates, volumes have been good in the past.  These travelers did not disappear.  They may have moved away from air travel due to ever more annoying airport security and the time this takes. Door-to-door time is likely faster if driving, even given the annoyances this comes with.  But an easy and convenient eVTOL option might swing traffic back into the air option.
  • For longer ranges, 100-200 miles, for example, new technology regional aircraft are viable.  This might explain the orders from Cape Air and Mesa.  At these ranges, air travel is still, perhaps,  the more time-effective option.
  • Much will depend on pricing.  If eVTOLs are cost-effective, this market will skyrocket.  If not, there may be a more muted response.

 

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Addison Schonland
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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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