Key stages and demand dynamics for Advanced Air Mobility scalability

AeroTime is pleased to partner with Lufthansa Innovation Hub’s TNMT newsletter to feature guest content on our website. This collaboration aims to regularly deliver insightful articles and analyses, focusing on the latest advancements and trends in the aviation industry. Article written by Kolin Schunck.

The journey to transform Advanced Air Mobility from a theoretical vision into a commercially viable reality hinges significantly on the industry’s ability to scale. Scalability is crucial because it enables the industry to achieve affordable unit costs, which can only be realized if AAM vehicles are produced at scale.

Scaling AAM involves two critical components: ensuring a sufficient supply of AAM vehicles and infrastructure and generating substantial demand for these offerings. Both components must be observed across the three fundamental stages of the AAM landscape: Pre-Launch, Launch, and Post-Launch.

In the Pre-Launch phase, the focus is on developing and certifying AAM vehicles and establishing manufacturing capabilities. Simultaneously, efforts must be made to build market awareness and interest, secure pre-orders or commitments, and engage with potential partners and stakeholders.

During the Launch phase, the industry must create a distributed network of vertiports and charging infrastructure and a seamless supply chain. On the demand side, this phase involves implementing marketing and sales strategies, fostering early adopter communities, and providing initial operational services.

In the Post-Launch phase, scaling Maintenance, Repair, and Overhaul (MRO) aftermarket services becomes critical, along with managing ongoing supply chain complexities and fleet management systems. Sustaining customer engagement, expanding market reach, and adapting to evolving consumer needs and regulatory landscapes are essential to ensuring ongoing demand.
Achieving scalability in AAM requires a comprehensive approach that addresses these factors holistically. It’s not enough to merely produce AAM vehicles.

The visual below outlines a detailed list of the most important scalability factors across supply and demand and across these three stages of AAM.

Let’s take a closer look at a few of these aspects, starting with the demand side.

Demand Dynamics: A Closer Look at AAM Aircraft Orders

The direct demand for AAM aircraft is undeniably the most critical element in scaling Advanced Air Mobility. Without substantial demand for AAM vehicles, there is little incentive to invest in and scale the necessary infrastructure, such as vertiports.

Fortunately, the demand for AAM vehicles, as evidenced by orders placed, looks promising.

The 12 most prominent AAM companies have collectively secured over 16,000 vehicle orders, with an estimated order book value exceeding $42 billion USD.

However, it’s essential to approach these figures with caution. Much of this order book value is tied up in Letters of Intent (LOIs) and options, which do not carry the same weight as firm commitments. The true level of interest and commitment will only become apparent once customers are required to make real downpayments. This phase will reveal which players are genuinely committed and which might have used these orders as a marketing or PR strategy.

Despite this caveat, the current order numbers indicate a strong market interest in AAM. In fact, this substantial order book value could have a positive ripple effect, demonstrating investor and operator confidence in the sector’s future growth, which could drive further investment in infrastructure, research and development, and other critical areas necessary for the industry’s scalability.

However, the big question remains whether the companies in this ranking, especially those at the top of the order list, such as Eve Air Mobility (2,950 orders), Electra (2,057 vehicles), and Ehang (1,868 orders), will be able to meet such high volumes. Achieving this will require robust manufacturing capabilities and effective supply chain management to avoid production delays and fulfill market expectations.

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