On The Radar
Avolon is a major airliner leasing group, so last year, when it committed to adding up to 500 of Vertical Aerospace’s four-passenger VX-4 eVTOL aircraft, it got the attention of the mainstream air transport sector. Major scheduled carriers Japan Air Lines and Brazil’s Gol have already signed up to lease large numbers of these prospective additions to the group’s portfolio.
Avolon recently published its latest annual outlook paper assessing the state of the global air transport market. Acknowledging continued uncertainties arising from Covid and other economic shocks, the "Rise Above" forecast's headline projection is that a recovery in air travel should gain some pace this year, but the rebound will reach only 70 percent of 2019 levels. The authors also flag up supply-chain strains impacting operations, along with a worsening skills shortage.
On the green side of the ledger, Avolon’s analysts reinforce the company’s view that eVTOL aircraft are an idea whose time has come. In addition to Vertical’s VX4, they say, nine other eVTOL prototypes will achieve first flights this year, though they decline to identify these. Aligned with this trend are expectations that sustainable aviation fuel production will quadruple in 2022, and that the price of carbon credits will double.
“Sometime around the end of 2019, we identified the disruption potential that electric aircraft could have on the industry, and the positive impact on the environment,” Marc Tembleque, project leader of the group’s new Avolone unit, told FutureFlight. “We wanted to be leaders and not just wait to be disrupted. We saw eVTOLs are the fastest way to introduce zero-emissions aircraft.”
Avolon views existing airlines as strong candidates to be early adopters of what it envisions as a massive new market opportunity for air taxi services. Tembleque pointed to their large existing customer bases, strong operational experience, and access to airports crying out for alternatives to ground transportation as the main factors behind this contention.
But Avolon expects to lease eVTOL vehicles to other types of operators as well. The Avolone team is engaged in detailed planning about how the new business model will work, and how lease terms may have to be adapted to reflect differences in operating models. “We’re convinced that demand will greatly exceed supply,” Tembleque said, explaining why it has decided to make early commitments to buy an aircraft that has yet to fly or progress beyond the early stages of flight certification.
Pressed as to why Ireland-based Avolon opted to support Vertical Aerospace, in which it is also now an investor, Tembleque noted the strong aerospace pedigree of the UK-based start-up's key partners, including propulsion system provider Rolls-Royce and avionics group Honeywell. He said that Avolon also feels that the company’s decision to seek type certification through Europe’s EASA agency involves less risk from a safety and marketing perspective.
Tembleque said that Avolon decided to make a direct investment in Vertical to have a stronger partnership with the manufacturer, and a “direct role in developing the eVTOL ecosystem and infrastructure to make sure that it works.” The company expects that the new aircraft will have significantly lower maintenance requirements than today’s airliners.
Avolon said it expects to announce more agreements to bring eVTOL aircraft into service this year while stressing that it hasn’t ruled out looking at other models. The company also sees longer-term potential for new electric fixed-wing aircraft.