To travelers who are sick of getting stuck in traffic driving to the airport, Delta Air Lines and Joby Aviation are offering an enticing vision: how about flying directly from downtown to the Delta terminal in 10 minutes via an electric air taxi?
To help make that happen, Delta is investing $60 million in the Santa Cruz, Calif.-based developer of green vertical takeoff and landing aircraft under a partnership unveiled Tuesday, giving the world’s largest airline by revenue a 2% stake in Joby and a seat on its board, with another $140 million promised if certain milestones are reached.
They plan to offer a premium service operated by Joby, initially in New York City and Los Angeles from existing heliports, that Delta passengers will be able to book seamlessly via the airline’s app and website when purchasing a plane ticket. They’re billing it as a “home-to-seat” offering, with the first leg of the journey likely to be by car, eventually to one of the “vertiports” Joby aims to set up throughout densely populated urban areas. Joby is hoping to win safety approval from the Federal Aviation Administration for its five-seat tiltrotor aircraft in 2024 and launch limited passenger service soon after, in locations it has yet to announce.
Shuttling travelers between airports and existing heliports is one of the best initial bets for aspiring makers of electric air taxis, avoiding the likely difficulties in creating new vertiports in cities. Joby plans to operate shuttle services to airports separate from the Delta deal, which they say will stand out by giving customers a faster trip, embarking and dropping them at Delta terminals. Eventually Delta hopes to take care of security screening before the air taxi flight and deliver travelers directly to the tarmac, CEO Ed Bastian said in a videoconference with reporters Monday.
It will save passengers an “enormous amount of time and distraction, as well as energy in getting on to their journey,” he said.
Both parties declined to discuss pricing or a target date for launching service, saying it would be dependent on developing the necessary infrastructure, which they anticipated would be helped by Delta’s heft with airports.
The partnership with the world’s leading airline is a feather in the cap for Joby, which is the best-funded and seemingly most advanced of the six electric air taxi developers that have gone public over the past few years.
“We believe that the routes to and from airports will be the cornerstone of the Joby service in cities and the partnership with Delta is so, so important to us across many levels,” said founder and CEO JoeBen Bevirt.
It also represents a welcome infusion of fresh capital as Joby faces up to huge costs. Not only must the company develop manufacturing facilities capable of producing hundreds of aircraft a year, it also has to build the infrastructure for the air taxi services it plans to operate itself.
A hedge fund that is shorting Joby shares, Bleecker Street Capital, issued a report last week arguing Joby is being overly optimistic on when the FAA will clear it to launch service, and accused the company of misleading investors by promising to build over 900 aircraft by 2026 while simultaneously telling local officials that its first factory in Marina, Calif., is only going to ramp to building up to 30 aircraft a year in the next five to seven years.
Bevirt said the Marina factory is only intended to handle initial low-rate production and the company is considering other sites for a larger assembly plant and production of lightweight carbon fiber composites for the airframe.
Last week, Joby filed for a shelf offering to sell up to $1 billion in securities. It had $1.15 billion in cash on the balance sheet as of June 30.
Other major U.S. airlines have paired with electric air taxi makers, starting with United, which in February 2021 said it would buy up to 200 aircraft being developed by Calif.-based Archer Aviation, with the aim of handing them over to regional partner Mesa Airlines to operate for shuttle service to and from the airport. United made a $10 million pre-delivery payment in August.
American Airlines invested $25 million in U.K.-based Vertical Aerospace in 2021, and agreed over the summer to make unspecified pre-delivery payments for 50 aircraft out of an order for up to 250.
Bastian took a dig at Delta’s rivals Monday, saying his airline had taken the time to study its options. “We … have been very diligent about focusing on what our customer experience and opportunity is as compared to just chasing an opportunity to do a deal with somebody,” he said.
The companies will explore allowing air taxi customers to accrue Delta SkyMiles points and other loyalty benefits, according to an SEC filing. Delta and Joby’s air taxi partnership will be mutually exclusive in the U.S. and U.K. for five years from the launch of service.