Why United Airlines is betting $1 billion on flying cars

It’s eyeing eVTOL as an opportunity to potentially attract business travelers.
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Illustration: Francis Scialabba, Photo: Archer Aviation

· 5 min read

Sitting in bumper-to-bumper traffic, maybe you’ve dreamt of a world where you could simply fly over the gridlock.

Investors, startups, and aviation bigwigs have all put billions of dollars toward making that vision a reality with electric vertical takeoff and landing (eVTOL) ventures. Five of these companies have gone public via SPAC in the last 18 months, with valuations ranging from ~$2 billion to more than $6 billion.

United Airlines is one of the many major carriers betting big on electric air taxis. The company has been an investor in California-based Archer Aviation since the startup was preparing to go public via SPAC in 2021 and also reached a $1 billion deal to buy Archer’s eVTOLs, with the option to purchase an additional $500 million of aircraft. In August, it put down the first $10 million toward that order, and in September, United agreed to buy 200 eVTOL aircraft from Eve Air Mobility.

“It’s about making our airline the airline that customers choose to fly,” Mike Leskinen, president of United Airlines Ventures,  told Emerging Tech Brew. “A) We want to innovate. And we want to provide that to our customers first B) We have the footprint—the geographic footprint—that makes us the right player C) It decarbonizes that trip to the airport. This is not taking regional aircraft out of the skies, but it is taking cars off the road, many of which will be burning gasoline,” he added.

Replacing rideshare

Both Leskinen and Archer CEO and founder Adam Goldstein believe that eVTOLs could change the way we travel in the long term, with the nearer-term use case of replacing helicopters and serving as a way to get from an urban center to an airport faster.

“The way that we think we will go to market—we’ll do it with United alongside, we’ll do it together. There will be these what we call trunk routes, which will be airport to city center routes,” Goldstein told us.

Travelers leaving Manhattan to catch a flight at Newark airport, for example, could make the trip in ~10 minutes via eVTOL, rather than spending 30, 60, or 90 minutes getting there via car, he said. The electric air taxi alternative to hailing a cab will cost ~$100 for a 20-mile trip, according to Goldstein. (FWIW, an NJ Transit ticket from Penn Station to Newark Airport is $15.25 and takes about an hour.)

Business travelers will likely be the first United customers taking eVTOL flights, Leskinen said.

“They’re going to be expensive at first,” he said. “As you build this product, as you certify this product, there are going to be massive economies of scale. And the cost is going to come down rapidly, to the point where I see a world where—because you get so much more utility out of the aircraft—the cost is no more than using an Uber X. But initially it’s going to look like an Uber Black.”

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The technology for eVTOLs—batteries and motors that can support short flights—already exists. The next challenge is how these aircraft will be regulated.

Archer is building a four-passenger electric aircraft and aims to get it certified by the FAA for use in the US by the end of 2024, Goldstein said.

“That’s [what] we’re on pace to do,” he said. “We are actively flight-testing the vehicles out here in California. We are working our way through the certification process, and we’ve already accomplished several big milestones with the FAA.”

The company’s plan is to create networks of air taxis in Miami and Los Angeles and build more than 5,000 eVTOLs by the end of the decade, Goldstein said.

Once these vehicles are approved to take to the air, the industry will have to figure out where electric aircraft will be able to takeoff and land. The FAA released design standards for this infrastructure last month.

The “vertiports” for air taxis could resemble helipads with charging stations, Goldstein told us, but some experts think eVTOL companies have underestimated the challenges of creating them.

During the company’s Q2 earnings call last month, Goldstein told analysts that infrastructure is “certainly going to be very challenging,” noting that Archer has hired the former head of global development at WeWork to work on that project.

For its part, although United has worked closely with Archer—former United chairman and CEO Oscar Munoz sits on the company’s board—the airline isn’t putting all its eggs in one electric basket.

“If you think about a big fleet of aircraft like United has, we fly Airbus aircraft, we fly Boeing aircraft, we fly Embraer aircraft. With eVTOL, I think that—in the fullness of time—is going to be the same,” Leskinen said.

Zoom out: The aviation industry is facing pressure from customers and investors to decarbonize. With eVTOLs potentially coming to market as soon as 2024, this technology is one airlines can invest in now that could be used in the near-term—Delta is the only major US carrier that hasn’t invested in eVTOLs, according to Insider.

But widespread adoption of eVTOLs won’t do anything to shrink the carbon footprint of air travel itself, which accounts for ~2% of global greenhouse-gas emissions. Airlines aiming to lower their carbon emissions will need alternatives like sustainable aviation fuels and clean hydrogen as well as carbon-capture tech—all of which the Inflation Reduction Act could help scale more quickly, Leskinen said.

Keep up with the innovative tech transforming business

Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.