VERTICAL AEROSPACE CREATES VISION OF FUTURE FLIGHT

Five years in the making, the VA-X4 electric Vertical Take-Off and Landing (eVTOL) aircraft looks set to radically change the way advanced innovative aircraft are designed, developed and integrated into complex urban airspace.

Vertical Aerospace, the UK-headquartered engineering business behind the VA-X4, says its mission is to make air travel personal, on-demand and carbon-free through designing, manufacturing, selling and servicing an aircraft that will travel at speeds of over 200mph, be near silent when in flight, produce zero emissions and deliver all this at an enviable low cost per passenger mile.

The VA-X4 is a one-pilot, four passenger winged vehicle which represents the culmination of multiple design iterations. Eight highly efficient lift rotors will minimize power and noise in hover, and a limited wingspan will allow it to operate in heliports to ensure a fast and efficient cruise with a range of around 100 miles. Further, through careful design and modelling, Vertical says it is confident that the X-4 will be capable of flying a 25-mile journey at an operating cost of just over one hundred dollars meaning a cost of one dollar per passenger mile. And for key shorter missions such as linking airports to city centres, the X4’s anticipated vehicle efficiency will allow it to rapidly charge in under ten minutes.

Michael Cervenka, President
Vertical Aerospace

And all this within a 2024-2025 timeframe. While this may strike even a seasoned industry veteran as ambitious, Vertical President Michael Cervenka, who, in a 20-year career with Rolls-Royce culminating in his heading the UK engine maker’s future technologies division, says the speed with which the X4 will be industrialized is very much down to assembling a dream industrial team, both within Vertical and without, through leveraging the excellence within its strategic industrial partners.

A Stellar Roll-Call

Indeed, Vertical has established an executive team with over 1,200 combined years of experience, one which has certified and supported over 30 different civil and military aircraft and propulsion systems. The industry roll-call features Eric Samson, former VP engineering and chief engineer at General Dynamics, Tim Williams, former chief engineer of Rolls-Royce, Madhu Bhabuta, former chief technology officer of the UK’s Ministry of Defence, Dr. Limhi Somerville, former technical manager at Jaguar Land Rover heading battery systems, Paul Harper, former UK chief airworthiness engineer at Airbus, and Eduardo Dominguez, former CEO of Airbus’ Urban Mobility.

A key strategic investing partner is Microsoft through its M12 venture capital fund. Microsoft’s expertise in high performance computing and simulation will be a key enabler in reducing our costs and time to market in embracing new technologies, Cervenka says. Vertical image.

Strategic Partnerships

This world-class team with its in-house focus on high value-add design and proprietary technology will combine what it brings to the table with a strategic ecosystem of top-tier partners, each of whom is itself adept at testing, building and certifying some of the world’s most advanced aircraft. The R&D expertise — not to mention commercial and manufacturing acumen — residing in industry partners such as Rolls-Royce, Honeywell, GKN and Solvay will allow Vertical to create a consummately asset-light business model with appealing unit economics.

Most importantly such strategic partnerships will accelerate Vertical’s path to certification, de-risk execution, allow for a lean cost structure, and will enable production at scale. Here, Cervenka says Vertical views certification as the greatest challenge particularly in the field of flight controls although this is significantly offset by those top tier aerospace companies working alongside the business. “Obviously, they are giving us a lot more in-kind support as they are paying for significant aspects of the certification programme and in the case of Rolls-Royce and Honeywell, they are investing directly in the business.”

Supported by such deep industrial expertise, Vertical is aiming for the VA-X4 to be certified to the most stringent European Union Aviation Safety Agency (EASA) large commercial aircraft standards and it is this level of safety assurance, Vertical says, that will help unlock an urban air mobility market of US$1 trillion by 2040 and one which could potentially grow to US$4.4 trillion by 2040.

Meeting Potential Demand

Vertical is developing the traditional airframer integration model beyond what is done today against a future landscape that will be characterized by huge demand in the eVTOL space meeting an inevitable constraint on supply. “The opportunity for us as one of the few credible players capable of certifying a vehicle within the 2024-2025 timeframe is how to meet that demand and leverage that early mover advantage,” Cervenka says. “From both a capital and industrial perspective it makes much more sense to leverage suppliers to do the bulk of the component and subsystem manufacturing and assembly,” he says, adding, “the idea is that all the suppliers do the subsystem assembly and pretesting so when we come to final assembly we will only have the fitting out of the fuselage and to bring in the cabin and cockpit system.”

The one area in which Vertical is very deliberately vertically integrated is on the X4 battery system which from a strategic point of view, is critical both in terms of the performance of the vehicle as any improvement here drives payload and range up and also in terms of keeping the commercial cost down. “We have some leading expertise,” says Cervenka, “and have hired some brilliant people headed by Limhi Somerville who is chairing the European working group that is defining the regulations for batteries so we have a real headstart in helping shape future regulation and that knowledge is a real differentiator for our business.”

For Cervenka, a key strategic investing partner is Microsoft through its M12 venture capital fund, which will play a crucial role in delivering such a very complex vehicle with its radically different physics that have to be comprehensively modelled and simulated. “We are entering a really exciting space because we’re seeing the biggest disruption in aviation since the Jet Age and the rate of technology progress is much faster than aviation has been used to,” he explains. “Aviation has become really expert at delivering small incremental improvements rather than big changes that are happening on a more rapid time scale and at least at an airframe level, it’s not the incumbents like Boeing etc that are well equipped to deal with that and we think the sweet spot is that combination of being an agile, focussed startup that is digitally native.”

Collaboration in the Cloud

“For me, Microsoft is the strategic partner here. Microsoft’s expertise in high performance computing and simulation will be a key enabler in reducing our costs and time to market in embracing new technologies. We are already using high performance computing based on Microsoft’s Zero Cloud system and they are also using us as a pathfinder in helping deploy their capabilities in other engineering organizations.”

“The other area in which we are collaborating is a bespoke cloud architecture. Digital aircraft inherently create a lot of data but then we get into a whole wider ecosystem of everything from airspace management through to wider B2B, B2C services. We have some of the best architects within Microsoft helping us build an architecture to really give us an incredible open system, leveraging all those future data opportunities right across the whole operational ecosystem.”

Vertical says it wants the VA-X4 to be certified to the most stringent European Union Aviation Safety Agency (EASA) large commercial aircraft standards. Vertical image.

Leveraging the deep expertise of industrial partners, Vertical confidently forecasts that it will break even with annual sales of less than 100 aircraft — calculated as the number of aircraft sales required to reach positive net income and cash flow in 2024. Here Vertical’s confidence is based on keeping its business agile and lean through being uniquely capital- and asset-lite. “Our competitors are raising in some cases billions in investment, while we have much more of a capital-lite business model both in terms of sharing the cost of certification with partners who have spent huge amounts developing technologies and the fact that they too are investing in the business,” says Cervenka.

“One competitor is essentially going to retain ownership of its vehicle but we think the market is plenty big enough so that we don’t need to capture every part of the value chain. We will therefore be predominantly an OEM and aftermarket business so the amount we need to spend to certify and industrialize our product is lower than our competitors.”

Another consideration is the fact is that eVTOL will be a supply-constrained market unlike the current duopoly of Airbus and Boeing where there is real commercial pressure to drive down margins. “In this world,” says Cervenka, “the cost of the aircraft is a very small part of the operating cost even on the basis of a ten-year lifecycle. That creates a dynamic where there is elasticity in pricing and the potential for us to be really profitable and to create an early return. That clearly gives us options in terms of developing future variants, hybrid variants and bigger vehicles.”

Virgin Atlantic wants to develop an ultra-short haul eVTOL airline. Many feel this ambition looks to have merit in Europe as it offers population density with 230 cities with a population of 300,000 people within 100 miles. Vertical image.

Airlines Take Notice

That confidence was no doubt buoyed by the announcement this summer that commercial partnerships and individual conditional pre-orders had been secured with American Airlines, Virgin Atlantic and lessor Avolon for up to 1,000 aircraft in total, providing a direct route to market and an opportunity to work collaboratively on key go-to-market workstreams.

American has agreed to pre-order, subject to certain conditions, up to 250 aircraft, with an option to order an additional 100 aircraft, Avolon has agreed to pre-order up to 310 aircraft with an option for a further 190, and Virgin Atlantic has an option to purchase between 50 and 150 aircraft. In addition, each customer has pledged to work towards the prompt certification and deployment of aircraft in commercial operations.

A detailed look at each individual airline vision on eVTOL is intriguing: American Airlines will work on passenger operations and infrastructure development while Virgin Atlantic will work with Vertical to explore the joint venture, Virgin Atlantic-branded short haul eVTOL network, which features not only operations but also infrastructure development.

“The world is moving more and more to cities with the mega trend towards urbanisation and ground infrastructure already can’t keep up. And while eVTOL is not the magic bullet that solves all that clearly there’s a huge pent-up demand and it represents a big enabler,” says Vertical’s president. “Our personal view is that intercity, flying point to point, will be the biggest market but it will take time and that is driven in many places by a need for more infrastructure, more advanced ATM systems to allow these aircraft to fly at low altitudes over public places – and also by public acceptance.” Cervenka says he believes that nearer term, the big strategic market will be airport-city centre operations. “That is a real high value market because we are talking 15-25-mile journeys but with a big time saving and therefore the dollar-per-mile you can charge is quite flexible.”

This is where American and Avolon come in. American is the largest airline in the world with a huge operations network globally. As a strategic partner, it is exploring with Vertical areas such as pilot training, US route options and infrastructure provision. Avolon, meanwhile, as the second largest leasing company in the world was swift to recognize the opportunities afforded by eVTOL and saw in Vertical the right fit in terms of potential partner. “Apart from the big order,” Cervenka says, “they give us access to nearly 150 airlines at C-suite level, they have a massive presence across the aerospace ecosystem so everything from Tier 1 and Tier 2 suppliers down to the ATM community. They bring that whole capability as well as having a very well-connected upfront sales force so I think there is an exciting space around what the future business model could be.”

X4 has an obvious appeal for airlines wanting to develop an airport-city centre journey proposition leveraging their brand and customer base expertise as Cervenka points out: “There is a compelling upsell opportunity so if you’re flying into JFK or Heathrow you can suddenly drive a much better journey proposition if you can connect that through an eVTOL. Inevitably, it’s going to start as a first-class market which will then work down.”

Virgin Atlantic‘s ambition to develop an ultra-short haul eVTOL airline looks to have merit as Europe offers significant potential here due to the continent’s population density: 230 cities within 100 miles of a population of 300,000 people — that compares with only 60 cities in the US — with many of those cities currently poorly connected. “Here,” Cervenka says, “we’ll do it very much as a partnership to create a ridesharing business — we provide the aircraft into that business although we will not own the aircraft. This is really compelling because of the cost of ground infrastructure as opposed to setting up ground to ground services with the flexibility that you will obviously need.”

Next Stop — Wall Street

Next steps for Vertical Aerospace will be to list on the New York Stock Exchange in the second half of this year. This intention was announced in June when the business entered into a definitive merger agreement with Broadstone Acquisition Corporation to enable Vertical to become a publicly traded company, with a pro forma $2.2 billion equity. At the same time, Vertical announced investments from American Airlines, Avolon, Honeywell and Rolls-Royce, through a private investment in public equity (PIPE), confirming their status as Vertical’s strategic partners with Microsoft’s M12, 40 North and Rocket Internet SE also investing in the business.

Following that will be a decision on the location of the initial final assembly plant which will be in the United Kingdom where the business can access a skilled workforce and discussions are ongoing with the nation’s authorities over tapping potential support and securing the necessary planning approvals. Cervenka says he sees future opportunities in Asia and the Middle East in the latter part of this decade to site a follow-on assembly facility. The US is another potential assembly location although with only 20 per cent of the forecast market, he believes the centre of gravity will be in Europe and Asia.

In terms of the impact of the global pandemic, Cervenka says Vertical is in the fortunate position of being pre-revenue although the business may well draw advantage in terms of the spare industrial capacity into which it can tap so it does not have to build that capacity itself. “Also, he points out, “the emerging focus on sustainability means that the reality is that there will not be another widebody produced this decade. The X4 has some very advanced technology that any developer of the next generation narrow and wide body aircraft is going to need in order to improve sustainability and efficiency. We can offer a technology route to that market by proving out those technologies on the X4 that will be strategically relevant to their core business.”

In June, Vertical admitted that it had deliberately developed a manned eVTOL in order to achieve the fastest route to certification and Cervenka here explains that that decision was equally down to the issue of public acceptance. While there remains no regulatory framework to allow an autonomous vehicle of the size and weight of the X4, the Vertical president believes that it will be a long time before regulators and the public are accepting of that.

“There is a journey to autonomy however,” he says, “with a starting point where there is a pilot on board but whose workload is dramatically reduced. Honeywell’s flight controls and avionics will massively simplify the job of flying the X4 and all the other activities a pilot has to do in a Part 135 world, reducing that workload by 80 per cent — and that’s a really good starting point for autonomy.”

“My view is that we’ll get to the point where more and more will be automated and the pilot will be there only for the emergency or the unexpected situation. Over the next decade, we will increasingly see vehicles fly with autonomous capabilities but with a pilot and that will be necessary to prove to the regulators and the public that we can build up a whole history of experience where the autonomous systems made the right decisions. Over time, I think we’ll get to the point of remotely operated vehicles where the intervention is carried out outside the vehicle — cargo over uninhabited areas first then gradually passenger-carrying operations and then over built-up areas before full autonomy. I do believe it will come — not his decade though — and most probably using different types of aircraft. And the X4 will be the perfect proving ground for that.”