Regional Air Mobility: Insights from Lilium and Groupe ADP's Partnership

Regulatory environment and its impact

Regulatory responses are crucial for regional air mobility, impacting delivery and production timelines. Increased regulatory oversight is anticipated, potentially affecting operational strategies and timelines for companies in this sector.

"What's been the response from the regulator as you've sort of informed them accordingly and what impact does that have on your delivery production profile looking forward?" --- (BA, conference, 2024/05/23)

"Conor Cunningham: Okay. And then, it seems like there's a potential for regulatory oversight to potentially pick up here." --- (DAL, earning call, 2024/Q1)

Market potential for regional air mobility

The market potential for regional air mobility is significant, with expectations for increased regional flying and capacity growth in regional markets. United Airlines highlights the profitability of operating smaller regional jets and anticipates an uplift in regional flying, indicating a promising future for regional air mobility.

"Savi Syth: Helpful. And if I might on another follow-up, just on the domestic capacity growth with building back the hubs, is that then where the capacity comes a lot in this kind of regional-type markets or should I think of it as kind of growth in regional then shift some of those aircraft on to kind of other bigger markets that you could use those aircraft?" --- (DAL, earning call, 2024/Q1)

"Like we couldn't have basic economy on a 50 seat regional jet, we did big airplanes where we could afford to sell the seats and still be profitable at those kinds of prices, and we created that." --- (UAL, conference, 2024/05/29)

"The Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 126 seats, and regional operations, which utilize smaller aircraft that are operated under contract by United's regional carriers." --- (UAL, sec filing, 2024/Q2)

"The Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 126 seats, and regional operations, which utilize smaller aircraft that are operated under contract by United Express carriers." --- (UAL, sec filing, 2024/Q1)

"We also expect to see some uplift in regional flying in the future. That will work against the gauge benefit that we expect over a two to three year time frame." --- (UAL, earning call, 2024/Q2)

Infrastructure development for regional air mobility

Operational flexibility, cost savings, and technological advancements are driving infrastructure development for regional air mobility. Honeywell's focus on automation and dedicated AAM units, along with GE's engine technology partnerships, highlight the industry's commitment to supporting and expanding regional air mobility infrastructure.

"And the reason for that is both the regional where people live, where people, where goods and services are located, the operational flexibility and the immediate operational savings you can get out of middle mile cargo using AAM vehicles is an easier win for regulators, for operators, for OEMs." --- (HON, conference, 2024/05/30)

"LEAP, the narrowbody engine of choice offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year.In regionals, Embraer and GE Aerospace extended our agreement for new CF34 engine deliveries through the end of this decade." --- (GE, earning call, 2024/Q2)

"This acquisition, which is direct concert with Honeywell's alignment to the megatrend of automation and future of aviation, furthers our ability to create value for our customers from nose to tail whether they are traditional operators seeking to increase the autonomous capability of their existing fleets or new entries in the advanced air mobility space." --- (HON, earning call, 2024/Q1)

"ahead for Aerospace Technologies, we expect momentum from the first half to carry over into the second half as robust orders and increases in factory output will support growth.In commercial original equipment, we anticipate the second quarter to be our low point of the year for growth and some related supply chain challenges abate." --- (HON, earning call, 2024/Q2)

"Back in 2020, we established a dedicated business unit to support Advanced Air Mobility, specifically recognizing that both the offerings as well as how we support those customers was going to have to be different." --- (HON, conference, 2024/05/30)

Challenges and risks in regional air mobility

Meeting fleet needs with flexibility and predictability, addressing maintenance and parts supply issues, and operationalizing regional aircraft are key challenges in regional air mobility. Diverse regional threats also pose risks, but efforts are ongoing to enhance efficiency and overall experience.

"There's nothing that's changing dramatically but we do have flexibility in order for us, 1, to be able to give them schedules that meet their fleet needs, albeit at reduced levels, but also confidence that in the future we're going to get more predictable." --- (BA, conference, 2024/05/23)

"The challenge we face on the maintenance front tend to be more parts supply than anything else, as well as all these new engine platforms that are out there from the GTF to the lead to the trend stabilizing, but they continue to get better." --- (DAL, earning call, 2024/Q2)

"The math lends itself to over time, tremendous efficiency, and again, hopefully a better experience, right? So I think the answer is all of it. We're solving for all of it." --- (ADP, earning call, 2024/Q3)

"BDS expects that it will continue to have a wide range of opportunities across Asia, Europe and the Middle East given the diverse regional threats." --- (BA, sec filing, 2024/Q1)

"And our remaining focus after that is getting the regionals, as well as our any remaining domestic aircraft, which is principally the 717 fleet, up and running over the next 12 months to 18 months." --- (DAL, earning call, 2024/Q2)

Future growth opportunities in regional air mobility

Groupe ADP sees significant growth potential in regional air mobility, unconcerned about market saturation. Uber's partnership with Joby Aviation highlights advancements in electric vertical takeoff and landing vehicles, emphasizing safety and noise reduction, further underscoring the sector's promising future.

"So, I think still lots and lots of opportunity for ADP from a growth perspective and certainly we don't worry about saturation being a limiter to our future." --- (ADP, earning call, 2024/Q3)

"Now our plans are to do so through partnership. We have currently an investment in and a global partnership commercial partnership with Joby Aviation. Joby Aviation is a leader in developing new technology of vertical takeoff and landing vehicles that are electric and are much safer than helicopters, for example, because we've got multiple rotors and also have a much better noise profile, so to speak, because it's not one giant rotor, but it's multiple rotors." --- (UBER, event transcript, 2024/05/06)