As investors envision a new era of hovering, environmentally friendly, electric air taxis flying short hops over traffic jams to nearby airports, the history of U.S. helicopter airlines may offer some keys to success.
New York Airways (1953-1979) and Los Angeles Airways (1947-1971)—along with similar operations in San Francisco and Chicago—were aviation trailblazers, part of the first wave of vertical takeoff and landing passenger airlines.
These aircraft weren’t electric, of course, but helicopters were still being perfected at the time. Just like any emerging technology, the helicopter airlines of the mid-20th century had their share of difficult challenges, including ridership and operating costs. Despite the benefit of federal subsidies, it was public perception in the wake of deadly accidents that eventually spelled the end.
As Archer Aviation (NYSE:ACHR), Joby Aviation (NYSE:JOBY), Volocopter, and others make plans to build their electric vertical takeoff and landing (eVTOL) airlines, they share many economic commonalities with their predecessors. Their key questions surrounding success will be the same:
- What routes will generate optimum revenue?
- What strategies will increase ridership and decrease operating costs?
- How can the technology and design of the aircraft be improved?
With that in mind, here are five lessons the eVTOL industry could take away from rotorcraft airline pioneers:
1. Obviously: Safety First
Of course, airlines must always make safety number one priority. May 16, 1977, provided a tragic reminder why.
Four passengers were killed while boarding a New York Airways Sikorsky S-61L helicopter at the heliport atop the iconic Pan Am Building in Midtown Manhattan. Sixty stories below, a pedestrian walking along Madison Avenue was fatally injured after being hit by parts of the helicopter’s main rotor blades falling from the rooftop.
“It was a mess. It was mayhem,” recalls longtime aviation industry consultant Robert Mann, who was in the city that day. “That was the beginning of the end of New York Airways.”
According to the National Transportation Safety Board (NTSB) report, “All fatalities were caused by the operating rotor blades as a result of the collapse of the landing gear.” The report blamed fatigue failure of a forward fitting on the right main landing gear tube assembly.
Ironically, Mann was in Manhattan that day to finalize a deal to expand helicopter service to the region. The tragedy effectively ended Mann’s Department of Transportation proposal for a tri-state commuter network that merged helicopters, cars, and rail. Instead, he joined American Airlines as an industry analyst and later as a fleet planner. The accident triggered a local ban on rooftop heliport operations that still exists today.
Two years later, New York Airways was history.
A decade earlier in California, two tragic accidents also led to the end of Los Angeles Airways, which billed itself as “the world’s first helicopter airline.”
Flight 417 and Flight 841 crashed in separate accidents in 1968 en route between Los Angeles International Airport (KLAX) and the now defunct Anaheim Disneyland Heliport, killing a total of 44 passengers and crew. The NTSB blamed both crashes on mechanical failures.
A 1977 report commissioned by NASA determined that Los Angeles Airways “went out of business, not because of high costs or high fares, but because of a great decrease in passenger volume resulting mostly from [the crashes].”
The importance of putting safety front and center is clearly on the minds of today’s eVTOL industry leaders.
Archer Aviation co-founder and co-CEO Brett Adcock focused on safety considerations surrounding his company’s air taxi prototype in a walkaround video released last June. “As we design the aircraft, safety was our number one goal,” Adcock said. “We can tolerate an entire system battery pack failure or two motor failures and still fly the mission safely.”
When Archer’s rival, Joby Aviation, talks about safety, it often mentions its “more than 1,000 test flights completed over the last 10 years,” and how the aircraft is designed to “meet the uncompromising safety standards set by the FAA.”
In addition to aircraft designs, safely integrating these low-flying air taxis into the existing national air space will be critical to success. Also, the infrastructure necessary for boarding, maintaining, landing, and departure must be designed with safety as a top priority.
2. Encourage Public Acceptance
“It is important to encourage public acceptance,” the 1977 NASA helicopter study said. It suggested accomplishing this “by the introduction of helicopter systems between airports.”
Virtually all of the major companies planning to start eVTOL airlines are planning routes to and from airports.
NASA recognized that “the main advantage of the helicopter is its potential for saving time” as well as their potential to energize surrounding economies. “They will open up jobs for pilots, mechanics, and ground personnel.”
In the long term, eVTOL companies plan to fly their air taxis without on-board pilots—they’ll be flown by remote control or by automated flight systems. Initially, eVTOL business plans call for pilots to be on board. “Having a piloted service will aid with consumer acceptance,” Joby said in an SEC filing last July.
3. Keep a Critical Eye on Operating Costs
The NASA report made its conclusion clear: “The major disadvantage of the helicopter is the high operating costs.”
In the early 1960s, tickets on a New York Airways airport shuttle cost between $5 and $9—the equivalent of about $47 to $86 in today’s dollars. Obviously, it’s too early for eVTOL airlines to announce fares, but estimates have ranged from $2.25 to $11, per passenger, per mile.
Running helicopter airlines was so expensive during the 1950s and ’60s, the federal government was compelled to provide $50 million in subsidies to help with operating costs and technology through 1965. That works out to $441.2 million in today’s dollars.
In fact, during fiscal year 1959 alone, subsidies amounted to 63 percent of total revenue, according to the FAA. Nonetheless, by 1977, the NASA study determined that federal financial aid failed to solve the industry’s revenue problems.
In general, eVTOL passenger air taxis are designed with lower operating costs in mind. Obviously, they don’t burn costly fossil fuels. Also, experts say they tend to have fewer mechanical parts than conventional rotorcraft. As a result, advocates say maintenance expenses will likely be lower, along with aircraft downtime.
The eVTOL long-term plan for keeping budgets relatively low includes automated aircraft flown by artificial intelligence software. When the industry matures, leaders hope to reduce their payroll costs by limiting the number of pilots needed to fly their fleets of hundreds of air taxis.
4. Maintain Tight Routes
A 1959 FAA report titled “Project Hummingbird” took a deep dive into helicopter commercial transport to analyze the market for what was being called “aerobus,” “aerocab,” and “aerolimosine” services.
It examined three possible “short-haul passenger markets susceptible to development by steep-gradient aircraft because of their ability to operate from small areas”: routes linking airports and business districts, flights linking nearby cities, and short flights for commuters traveling from downtown to the suburbs.
The FAA concluded all those years ago that “commuter travel by helicopter between suburban points and city centers seems likely to develop only to a very limited extent.”
New York Airways routes were fairly limited, linking Manhattan with the region’s three major airports: Newark Liberty International Airport (KEWR), LaGuardia Airport (KLGA) and John F. Kennedy International Airport (KJFK). Some helicopter airlines tried to reduce operating costs by consolidating network routes.
A route consolidation, if successful, can allow an airline network to serve the same destinations with fewer aircraft operations. The result would be a decrease in overall operating costs.
The key is consolidating the routes enough—but not too much. Excessive consolidation might backfire and result in lower passenger demand.
As an example, SFO Helicopter Airlines—in California’s San Francisco and Oakland market—underwent a reorganization in the 1970s. Then-President Richard Lovorn reduced staff and “cut back the elaborate route network,” according to the NASA report. “As a result, SFO was able to operate with some success….” until the mid-1980s.
It’s very early for aspiring eVTOL airlines to be making commitments to establish specific routes. However, in Los Angeles, several companies, including Archer, Joby, and Volocopter are already talking with a local government-community transportation partnership about possible locations for neighborhood vertiports. Archer has partnered with United Airlines, suggesting its eVTOLs would carry United passengers on routes linking downtown or suburban departure points to KLAX—which is a United hub.
Investor materials indicate that Joby is considering direct routes with no layovers. Aside from the battery technology, which limits eVTOL range, compared with helicopters, there are other reasons why this makes sense. Based on analysis from the NASA helicopter study back in the ’70s, “It seems unlikely that passengers would patronize a system requiring more than three takeoffs and landings on what otherwise would be a short trip.”
Blade (NASDAQ:BLDE) is already proving that a vertical takeoff and landing service can work in New York.
In 2014, Blade started offering on-demand helicopter flights from Manhattan to surrounding destinations. The company offers flights to New York airports and has plans to transition to eVTOL aircraft in the coming decades.
“We may be flying helicopters today, but we’re not a helicopter company,” Blade CEO Rob Wiesenthal told CNBC in December. “Our job is to find high-friction routes—routes that take a long time by car, a short time by helicopter, that are priced effectively. That could be going to the airport…It could be flying to UBS [Arena] from New York to see your favorite team.”
5. Include First and Last Mile
Helicopter airlines of the 20th century, according to the NASA report, suffered from a “disadvantage” that “a secondary access mode is needed from the heliport to the final destination and vice versa.”
These days, that concept is called “first and last mile”—in other words, making sure passengers can seamlessly transfer to ground transportation immediately after their flights.
Blade already includes this in its business model. Honda has proposed building an entirely new “mobility ecosystem” that includes eVTOLs, automated, self-driving cars, and a reservation-service system.
Archer and Joby plan to include the first and last mile in their passenger services, as well. In fact, Joby, which is backed by Uber, intends to leverage Uber’s already popular mobile ride-share app to include ground transportation.
The first wave of vertical takeoff and landing airlines ended more than 30 years ago. But the airlines’ failures and successes provide a foundation of valuable lessons for the nascent eVTOL industry.
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