ERJ - Air taxi interest heats up as FAA highlights milestones
2023-06-10 12:00:00 ET
Electric vertical take-off and landing (eVTOL) operators are attracting evermore attention as regulators signal the reality of flying taxis appears closer than ever.
Indeed, the Federal Aviation Administration said that it is “planning for integration of these aircraft into the airspace, and collaborating internationally” in an update just this week. The latest update adds to an operational blueprint released by the agency in May. Adding to optimism on regulatory headway, acting administrator of the FAA, Billy Nolen, is reportedly nearing an agreement to join Archer Aviation ( ACHR ), joining former FAA chief and current Joby Aviation ( NYSE: JOBY ) director Michael Huerta through the regulator to company board revolving door.
The spate of updates in recent months has sparked major rallies for the likes of Archer Aviation ( ACHR ), Joby Aviation ( JOBY ), Blade Air Mobility ( BLDE ), Embraer-backed ( ERJ ) Eve Air Mobility ( EVEX ), Lilium ( LILM ), and Vertical Aerospace ( EVTL ). For example, both Archer and Joby have surged to over 40% gains in the past month, the latter running over 100% higher year to date. Boeing ( BA ) subsidiary Wisk Aero, Beta Technologies, and German manufacturer Volocopter GmbH have each garnered increased attention as well.
The Sky is the Limit
According to Canaccord Genuity, the potential for these aircraft could be grander than the helicopter-like niche many now assume. Instead, the air taxi service could become a ridesharing-like industry and challenge the likes of Uber and Lyft.
“eVTOL aircraft, given their optimized ranges in the 20- to 50-mile range for journeys, are in a strong position to take share in the ground vehicle-based ridesharing sector. Based on our estimates, ~15% of rides hailed to and from airports and 5% of longer-distance regional trips could be replaced by eVTOL aircraft, potentially reaching 45M monthly active riders within the
next decade,” the team wrote on Friday. “At a target ticket price of ~$107 for an airport-ranged flight, we estimate that the TAM for eVTOL travel in urban metros could be worth nearly $58B by 2033.”
The analysis adds that eVTOLS could be smiled upon by lawmakers given their potential to reduce emissions. Further, the proliferation of these electric vehicles could “greatly reduce traffic congestion, reducing fuel wasted and carbon emitted from being stuck in traffic” while also easing commuting in general for travelers.
Aside from commuting and consumer use, airlines have also latched onto the idea of air taxis for short-haul service. For example, Delta Air Lines ( DAL ) has inked tens of millions in investment toward Joby Aviation ( JOBY ) just as United Airlines ( UAL ) has conversely backed Archer ( ACHR ). Meanwhile, American Airlines ( AAL ) has committed to buying tens of eVTOLs from Vertical Aerospace ( EVTL ).
Primed for Takeoff?
That said, the crowded industry is likely to be led by a select few firms in its infancy, according to Canaccord’s analysis. Archer Aviation ( ACHR ) and Joby Aviation ( JOBY ) are the team’s chosen winners at the present juncture.
“In our view, JOBY and ACHR are the closest to having their respective aircraft types certified by regulators, with years of flight tests under their belts and final approvals expected in 2024 ( ACHR ) and 2025 ( JOBY ),” the analysts concluded. “EVEX, which is backed by aircraft OEM Embraer, has yet to fly an aircraft but has amassed a massive $8.3B order backlog. JOBY, ACHR and EVEX also remain well-capitalized.”
By contrast, Lilium ( LILM ) and Vertical Aerospace ( EVTL ) look much farther away from reaching certification in the team’s view. As such, both were started at Hold ratings in contrast to the Buy ratings assigned to Joby and Archer. Joby ( JOBY ) and Archer ( ACHR ) were assigned ambitious price targets at $8 and $9 respectively. The upside projected for Eve Air Mobility ( EVEX ), Lilium ( LILM ) and Vertical Aerospace ( EVTL ) was comparatively far more modest.
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Air taxi interest heats up as FAA highlights milestones