What Comes Next for the Aviation Industry: Flying Cars?

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Up until this year I always thought the 9/11 attacks would be the worst crisis aviation would face. At least in my lifetime anyway.

I guess that goes to show just how naïve I was about the industry…

This pandemic has literally brought air traffic to an almost complete halt. With many borders closed all around the world, flying has become a rarity.

Just looking at the figures out of the US:

The United States Transportation Security Administration screened fewer than 130,000 air travellers on 3 April 2020, compared with 2.5 million on the same day in 2019.

That is a 95% decline in people flying.

A reality that airlines and airports are grappling with all around the world.

It truly is an unprecedented event. One that has already led to bailouts from multiple governments.

Here in Australia though, money has been tight. The only real winner so far has been Regional Express (Rex). Receiving more money from the government than Qantas and Virgin combined.

For many in and outside of the industry that is vexing.

As we’ve seen for weeks now, Virgin is on the brink of going under. Their only hope now is finding a suitor to provide enough cash to ride out the worst of this pandemic. And with the federal government refusing to step up, they’ve been thrown to the wolves.

And sure, there has been plenty of interest. But the reality is aviation isn’t going to return to ‘normal’ for quite some time. Maybe never…

Pain for many, gain for some

According to the International Air Transport Association (IATA), air traffic will be muted ‘til 2023. Meaning, it’ll take three years before we see figures return to pre-corona levels.

Obviously, it will be a gradual road to recovery during this time. But the fact that it could take that long is just further salt in the wound.

In the short term that could mean far less creature comforts for passengers.

Qantas has already pulled the plug on in-flight entertainment and WiFi. Decisions that were made in order to rein in costs. Something which may become far more prevalent on future flights.

You’d best prepare yourself for a very different flying experience on your next holiday.

Plus, this is likely just the tip of the iceberg. I fully expect to see even more drastic changes over the coming months and years. Not to mention more insolvencies.

This is going to be the defining moment for the future of air travel.

But, that doesn’t mean there won’t be companies who emerge as winners from all of this.

Any business that relies on aircraft for tasks other than human transportation will be thrilled.

Cargo and delivery services in particular will have a field day as airlines shrink their fleets. Giving rise to an even greater prevalence of e-commerce.

Sectors that rely on planes for industrial work could also benefit. Crop dusting, aerial firefighting, and photography are just some examples that come to mind.

Take a company like Nearmap Ltd [ASX:NEA], for instance. Their business revolves around aerial mapping. A task that requires them to rent or charter flights regularly. They could benefit greatly from a glut in grounded aircraft.

Beyond this though, the biggest winner could be for a product that doesn’t even exist yet. A futuristic technology that has long been seen as a pipe dream…

Flying cars.

Lift-off for the limitless

I know, I know; flying cars will still seem like a silly idea to some people. You may even be one of them, I certainly was a sceptic at first.

The thought of flying cars seems unwise at first glance. After all, just look at how bad we are at driving on the ground. Road accidents happen all the time and claim far too many lives every year. Taking that risk to the sky just seems like it would be asking for trouble…right?

Yes, it probably would. Which is precisely why flying cars won’t be for everyone.

In fact, right now it would be far more apt to refer to them as flying taxis. Vehicles that won’t be controlled by everyday people, but instead be utilised by them.

As the name suggests, it will be just like a taxi. You hop in, get flown to your destination, and hop out. The actual flying will be left to trained experts or even advanced AI. That’s a discussion for another day though.

Instead, the takeaway for today is the fact that flying taxis could be a big winner. With modern airlines as we know them at breaking point, the potential for a smaller, more personalised air travel experience is huge.

It wouldn’t totally replace commercial flights. Especially any that are long distance. But it could complement them by providing a wider array of regional choices.

Initial investigations into the potential of this market is far bigger than you might think too. Morgan Stanley Research has estimated that air taxis could become a US$1.5 trillion industry worldwide by 2040.

On top of that, we’re already seeing some major names linked to flying taxi development. Uber, Boeing, Toyota, and Airbus are just a few on a growing list — companies that are vying to pave the way for this novel technology.

And if you still think it may sound like a distant fantasy, well you’d be surprised.

EHang, a Chinese-based air taxi company, is already up and running.

Not only do they have a prototype vehicle — the Ehang 216 — but they completed a trial flight in January this year. Completely autonomously, might I add!

Since then the virus has done little to stop their progress. Signing agreements to operate in both Spain and Norway.

Not to mention a recent commitment to build an entire air taxi terminal in Hezhou, China. The first ever of its kind in the world.

So, believe me when I say that flying taxis are very real. And for the aviation industry, that just may be exactly what it needs to move forward.


Ryan Clarkson-Ledward,
Editor, Money Weekend

PS: Bitcoin buyer’s guide — everything you need to know to buy your first bitcoin today. Download your guide now.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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