Is the expected culling of air mobility companies at hand? At least one analyst sees evidence it could be

If he’s right, we’ll soon see some closures and mergers

This story has been updated to correct an instance of misspelling of Robin Riedel’s name, and to clarify his role at McKinsey. 

Robin Riedel, a partner in the New York-based McKinsey consulting firm, spends his time interviewing executives from air taxi companies, poring over public reports from these companies and reviewing FAA documents related to them.

When he analyzes that information in light of his understanding of past aerospace innovations, he sees a few air taxi developers receiving the FAA certificates needed to operate on a limited basis in the next two years — but the news may not be good for everyone.

“There are probably going to be a few players who cannot continue at some point, and that might take the form of them just shutting down. It might also take the form of merging with others or selling their technology,” Riedel told me. “I wouldn’t be surprised at all if we see a few players discontinuing this year, and a few more next year.”

[Read the full interview in the June issue of Aerospace America]

He declined to name any companies, citing his role as an analyst and industry advisor.

Several companies, including California-based Joby Aviation and Archer Aviation, received hundreds of thousands of dollars by going public in 2021 through special purpose acquisition company deals, or SPACs, which allow a private company to become publicly traded in a quicker process than through the traditional initial public offering, in what is known as a reverse merger with a public company. Still others, like Wisk, also of California, have gotten funding from legacy aerospace or automotive companies.

But that type of funding is not guaranteed going forward, Riedel said.

“It’s been quite fortunate in the way that [the industry] got funding and the support of the aerospace and automotive industries,” he said. “Very few of the players out there today have enough funding to really get all the way to full commercial operations.”

Evolving regulations and public apprehension about new technologies are also challenging the industry, he said. Batteries have advanced, but not to the level needed for widespread, regular air taxi service yet, he added.

“The public needs to be engaged and supportive of regulations allowing these aircraft to fly in their neighborhoods or downtown or wherever so that people understand why these aircraft are helpful, why they are not dangerous,” Riedel said.

When some AAM companies do begin commercial service, Riedel believes the industry will advance slowly.

“We’ll need to see several iterations of aircraft, evolution of designs, before we reach mass production,” he said, adding that “in the next few years, we will likely see one or two routes in a couple of cities. But that is still more of an initial test run than what you would call a mature, at-scale operation.”

While some operators will start with urban routes, Riedel believes regional service and cargo transport may be easier to provide in the first few years of operations. He said that’s because regional airports are readily available, and cargo operations won’t require the public to place trust in a completely novel aircraft.

“By the end of this decade, we’ll see a few markets in the world where we will see something that starts resembling full scale, [meaning] dozens of aircraft throughout the day,” Riedel said. “But we’re still going to be far away from the skies being constantly blackened by vehicles in the air.”

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Is the expected culling of air mobility companies at hand? At least one analyst sees evidence it could be