Lucky Lindy shows the way for AAM investment

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It must have been cold in those open cockpits. Especially mid-winter over Missouri, as Lucky Lindy, AKA Charles Lindbergh, and colleagues, pioneered routes for the US Mail in war surplus Airco DH.4 biplanes.

A little shy of a century later, the path Lindbergh blazed looks set to be repeated for the latest leading-edge aviation technology – advanced air mobility (AAM). Just as fixed wing aircraft developed through the delivery of mail and cargo, slowly building confidence in the technology, before graduating to passenger flight, so AAM is following in its wake. And big investment dollars are following too.

It’s a point well made by Cyrus Sigari, co-founder and managing partner at UP Partners – the venture capital and private equity firm. As a co-founder of jetAVIVA, he knows the sector intimately. “The next 10 years will be the equivalent of the airmail industry for aviation,” he told delegates at Revolution.Aero’s Town Hall online meeting last week.

It was the airmail industry that set all the navigation routes, the pilot training and the manufacturing tech – they were the real customers. Once they learned how to deliver packages safely in the early 1900s, that’s when people had the confidence to get into these flying machines and that was the beginning of commercial aviation.”

The next 10 years will see a similar trend for advanced air mobility and that’s already beginning to inform investment decisions. “A big part of advanced air mobility’s next 10-year phase is going to be the airmail industry,” said Sigari. “The focus of investment is already shifting to cargo and drones.” The 2030s will witness the equivalent of the commercial airline industry “where we start to move people at scale”.

Sigari expects more investment to follow – and not just from established aviation investors. ”We are going to see some pretty meaningful bets made by people who have never traditionally invested in aviation,” he said. Last month US car giant General Motors (GM) announced a $800m fund to invest in this space, he said. “And other folks, who have been nowhere near aviation are starting to make big bets.”

The size of the prize varies, depending on who’s holding the calculator. Investment bank Morgan Stanley predicts the growth of a $1.5trn market over the next 20 years. Citi Research has more modest expectations. At present, in transportation, present battery power was sufficient to power small training aircraft in the circuit or pattern, leading to a market valuation of about $100m/year. That’s the view of Charles Armitage, European aerospace and defence analyst at Citi Research, based on 2019 report ‘Electric Aircraft, Flightpath of the future of Air Travel’, which he co-authored.

But with the advent of batteries capable of powering electric aircraft over 800 nautical miles, very large-scale investment becomes a strong financial proposition, Armitage argued. “At 800 nautical miles [range for electric aircraft], you can do [match] 60% of all narrow-bodied [commercial] flights. That’s a $60bn market.”

Whatever the precise figures, millions of investment dollars are looking for a home in the AAM market and the Fourth Aviation Revolution – despite (or perhaps even a little because of) Covid-19.

Meanwhile, after pioneering the mails, Lindbergh went on to win the Orteig Prize for the first solo Atlantic crossing in 1927. Two decades later, he helped the US win the war in the Pacific by developing aircraft engine-leaning techniques. Now Erik Lindbergh, his grandson, is one of the leaders of the electric aviation revolution pushing for sustainable flight.

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