At McKinsey’s third Regional Air Mobility Summit held in San Francisco last week, Robin Riedel, partner and co-leader of the consulting firm’s Center for Future Mobility, outlined progress in the development of pure electric and hybrid-electric aircraft and how they might fit into the air travel ecosystem. Each year, McKinsey has invited a few dozen air mobility executives to discuss trends and share information (under Chatham House Rules that promote open dialogue).

While many conferences and public discussions in the advanced air mobility arena have focused heavily on eVTOL aircraft, Riedel believes that signs point to a shift in expectations for this nascent industry, from an over-focus on vertical to conventional takeoff and landing (CTOL) aircraft that will be technologically less complex and ideal for regional air mobility (RAM). This will include cargo and passenger flights from 100 to 500 miles with five to 50 people and not only CTOL but also eVTOL and STOL aircraft serving smaller airports that aren’t as capacity-constrained as the larger facilities that handle 43% of worldwide passenger traffic. Orders for RAM aircraft and powertrains have reached about 13,600 vehicles valued at nearly $85 billion, according to McKinsey's latest data.

“Regional air mobility is a different market than eVTOL,” Riedel said. “There’s a fair amount of people who say, ‘That’s probably the more likely market.’ The eVTOL market sounds great but you need completely new aircraft…infrastructure…business models. Whereas what I would call regional air mobility is something that we used to have quite a bit of, even in the U.S. You used to have hourly flights between San Diego and Los Angeles, things like that.”

There is a precedent, even now, for RAM operations using conventional airplanes. Companies such as Cape Air, JSX, Surf Air, Contour Airlines, Tradewind Aviation, Boutique Air, and others are already serving RAM markets with point-to-point flights from smaller, underutilized airports.

According to McKinsey's research, there are even more RAM opportunities, from point-to-point trips to feeder flights to major airports and replacement of turbine-powered aircraft with electric CTOL aircraft on existing routes. By 2035, today’s $5 billion RAM market could grow to $70 to $115 billion (low-end to high-end cases) and 18,000 to 36,000 aircraft.

“There’s still a lot of private car trips,” Riedel said, “so the opportunity for regional air mobility is about thinking how we create some air networks that work again.” For that to happen, aircraft developers and certification authorities need to accelerate their work.

No Point Blaming Regulators For Delays

One of the key themes that came from the McKinsey summit this year was that developers have concluded they can’t blame regulators for delays in certification, Riedel explained in summarizing discussions. They are saying, he added, “‘This is up to us as an industry to come up with the things that regulators can truly approve.’ Almost the whole group said, ‘This argument around regulation is slowing us down, or uncertainty around regulation. That's actually not true. Let's all be honest. We know what we need to do. We know what the government is going to expect, and fundamentally, both EASA and the FAA have been very supportive.’ That was refreshing to hear, to take that ownership. That group said, ‘We just need to come up with better answers, rather than regulators.’”

Another important factor affecting RAM is geopolitical uncertainty, including tariffs initiated by the U.S. government and how these will affect global supply chains. RAM aircraft aren’t going to fly across borders much, Riedel said, but manufacturing takes place on a global scale because no one country has the resources for entirely in-country vertical integration. “Does that mean we’re going to have a European ecosystem and the North American ecosystem, and where do the Canadians fall within that ecosystem?” he asked.

Another part of that theme is China, where EHang and other eVTOL pioneers are already operating aircraft. “In the Western world, we have a tendency to downplay the Chinese risk, and almost belittle their aerospace efforts,” Riedel said. “If you look at electric vehicles on the ground, BYD by now is beating Tesla. If you look at batteries, we’re completely dependent on [China]. The Chinese have a number of [eVTOL] programs that are flying, not just EHang but a bunch of others. I think there’s a recognition that in this whole space of electric aviation, we have to be much more conscious about what’s happening in China and how do we need to compete?”

During the summit, participants had a “renewed optimism” on timelines for their aircraft programs, Riedel said. “There was just much more confidence by players to say, ‘We’re close to the finish line on some of these things and have actual programs, actual timelines laid out. Of course, there’s always going to be delays. In some programs, there’s always going to be surprises.”

Europe is Falling Short

While China’s government is investing heavily in RAM and urban air mobility (UAM), some Western governments aren’t so supportive of this new industry, in Riedel’s opinion. “The general consensus was the U.S. is very supportive and Europe is lacking,” he said. “You saw Lilium and Volocopter going out of business [insolvent]. If you look at the eVTOL space, there's only Ascendance left within the European Union, Vertical in the UK [which is no longer the EU]. You have Heart Aerospace moved to the U.S. Yet they still have their operation in Europe, but the CEO now lives in Santa Monica [California]. They have the Plattsburg [New York] operation and a Santa Monica operation. Part of that is that the environment here, getting the right engineers, the mindset to build new things, the funding, the government support, it’s just stronger here than in Europe.”

As for China, while it hasn’t had much success in exporting aircraft to Western users, that is likely to change. “It’s a strategic industry that China wants to own,” he said, “and they seem to be interested in building up expertise.”

That expertise is going to have to include how to manufacture complex vehicles in high numbers. Investments in eVTOL companies by auto manufacturers may help, including Toyota funding Joby and Stellantis supporting Archer, but these auto companies have no experience building composite aircraft in any volume, much less mass producing them.

“Let’s think about doing things slightly different than we have historically done in aviation that can enable some of those rates,” Riedel said. It’s easier, for example, to produce thermoplastic parts in high volume compared to composite parts that require hand layup, although he also believes that robotics will be able to take on some of this burden.

The Power of Automation

“Aircraft historically weren’t designed for the use of automation. But if you step back and say, ‘If I design an aircraft truly for manufacturing, truly for automation, what would that look like, and what can I accomplish?’” Joby’s prototype production line demonstrates, Riedel added, that “There is much more use of automation that we see in aerospace today, and there’s an opportunity to just do more of that, even in the composites world. Machine layups of composites is definitely a thing that can be expanded. It’s a real challenge. It’s one of those things we have to figure out. However, there are ideas and pathways to do some of that.”

Despite some stabilizing of the funding of these new machines, the industry raised more money in 2024 than in 2023, according to McKinsey’s analysis. Further funding, which is essential for programs that will each cost well more than a billion dollars to bring to certification, depends in large part on “investors’ willingness to believe that you have the path to certification,” he said.

“We’ve been quite outspoken about some of the crazy timelines [for type certification],” Riedel added. “Here’s what I would say to some of these startups. If you want to drive innovation, you almost have to be a little bit crazy and unrealistic to do something disruptive. If you told me everybody’s gonna hitchhike using their phones, I would have said, ‘You’re crazy,’ and yet, Uber was successful. Or if I had said, ‘We’ve got to sleep on people’s random couches,’ but Airbnb still worked. You have to be aspirational, though you should probably not count on breaking the laws of physics in the process. Bill Gates said, ‘Most people overestimate what they can achieve in a year and underestimate what they can achieve in 10 years.’ I think that is going to be quite true for this industry as well.”

Taking the Gulf Fastrack 

A surprising twist in the sector is Archer’s recent plan to send uncertified aircraft to early adopter countries, such as the UAE, for testing and proving in anticipation of certification. Riedel sees this as the “eVTOL players all need to show that they can launch the aircraft early on and are looking for supportive environments.

“There’s uncertainty in the U.S. about how certification, public support, and other things will happen. The promise of having a country where if the supreme leader or a high government official wants something, you quickly get the [applicable departments] aligned. It’s just a faster process, for better or worse. I think the eVTOL players see that as an opportunity. There’s less red tape. There’s a faster process because it’s a society that’s embracing technologies. And of course, there's always funding, deep pockets, several wealth funds.

“On the other side, this is a sexy technology. And local governments love the idea of showing how embracing of technology they are. The idea of having flying cars around your city fits that overall narrative. They also are trying to get industry into their country. I don’t have any inside information, but I wouldn’t be surprised if some of those discussions include, you’ve got to put a production line here or a supply base, whether that’s in Saudi or in the Emirates, so there’s an industrial component to it. That is not just limited to eVTOL. We hear the same thing about a potential new narrowbody that Embraer might build.”

Despite progress made so far in RAM and urban air mobility development, Riedel sees commercialization of this industry and its novel propulsion systems still three to five years away. Augmentation of flight with sophisticated automation systems, such as Skyryse’s fly-by-wire, simplified control system, will come sooner. “We’re much closer than people realize,” he said. 

For commercial passenger transport, he added, IFR capability will be essential, except for edge cases such as tourism, which can be done under VFR. “Fundamentally, to make this a meaningful industry, it has to be IFR.” And this imposes additional certification and performance burdens on the manufacturers of these new aircraft.

Funding remains a challenge for the companies that remain standing. “There’s no doubt there needs to be more funding,” Riedel said. However, despite the bad news from Lilium and Volocopter, “in 2024 [funding] was more than double the year before. It was as good as 2022, and it was just slightly lower than 2021. Even in a year where venture capital overall has been struggling, there was still $4 billion flowing into this industry, but it is much more concentrated now on a few players.”