Delta Airlines will invest $60 million in Joby Aviation, a leading electric air taxi startup, to create a “home-to-airport” service using the startup’s five-seat electric vertical takeoff and landing (eVTOL) aircraft, the companies announced Tuesday. Delta said its investment in Joby could go as high as $200 million if the company hits certain milestones.
The service, which will launch first in New York City and Los Angeles with other cities to follow, will be “mutually exclusive” across the US and UK for five years, with the option to extend that exclusivity for longer, the companies said. The home-to-airport service will exist in parallel to Joby’s currently nonexistent airport service, transporting passengers from cities to airports.
In a briefing with reporters, Joby CEO JoeBen Bevirt said that a trip from Manhattan to JFK Airport, which can take as long as 50 minutes to an hour when traveling by car or subway, would take as little as 10 minutes when flying in one of the company’s five-passenger aircraft — “along with a really spectacular view,” he added. It’s a nice thought, but the truth of the matter is that the type of aircraft that Joby is developing — electric, low noise profile, cross between helicopter and drone — is not yet approved for any commercial service anywhere in the world.
Neither Delta nor Joby would disclose when they intend to launch the service, noting the lengthy regulatory process that Joby’s unique aircraft still needs to undergo. They also didn’t reveal how the service would be priced, although Bevirt said he wanted fares to be “accessible.” Joby has said it intends to launch its first commercial service in 2024.
Delta is the latest major airline to bet on unconventional aircraft technology, in the expectation that city skies will soon be teeming with small, egg-shaped vehicles with fixed wings and tilt rotors that run on battery power. Delta CEO Ed Bastian said his company’s investment was distinct from other similar funding announcements because the airline wasn’t seeking to purchase Joby’s aircraft or operate the service itself.
“We’re not looking to be an operator; we’re going to be working with Joby, who’s going to be our operator,” Bastian said during a briefing with reporters. “And so all of our attention and focus is really on delivering a great customer experience and providing the airport infrastructure.”
As previously noted, electric air taxis aren’t a real thing yet. They face a host of technical and regulatory challenges before they can scale up into a meaningful service. So far, those projects have proven costly to implement, requiring the construction of a vast network of rooftop or ground-level “vertiports” and regulatory approval from a host of federal, state, and local agencies.
Joby Aviation, which was founded in 2009, has been attacking this problem for quite some time, and it has a lot of financial support, including investments from Toyota and Uber. The company went public in February 2021 after merging with a “blank check” special acquisition company, or SPAC. The company got $1.6 billion as part of the deal, but has struggled to win new investments until now. Joby’s stock is currently selling for around $3.80-a-share.
Asked what milestones Joby would need to hit in order to unlock the full $200 million investment, Bastian didn’t provide a clear answer. The company has made some notable regulatory progress in recent months. Earlier this year, Joby was awarded with a Part 135 Air Carrier Certification by the Federal Aviation Administration, which the company need to operate an on-demand air taxi service. It still needs two more certifications, alongside type certification and production certification, before its aircraft can legally carry passengers.
Noise could be a problem for Delta and Joby. The eVTOL startup claims its aircraft are far less noisy than internal-combustion engine vehicles like helicopters, which allow them to operate within residential communities without subjecting people to brutal levels of noise pollution. The company conducted several tests with NASA recently that found its aircraft producing a level of noise while flying overhead similar to the hum of a refrigerator. Joby said most people would barely notice it.
Volume production will be another challenge for Joby. The company presented a bullish view of its production plans in it investor deck when it went public, but a recent short seller report noted that it filed plans to build a much smaller facility with regulators. The short seller said Joby is overstating how many aircraft it plans to eventually produce. Bevirt noted that Joby has yet to select a location for its Phase One facility, but it is currently in conversations with a number of different possible facilities.
Delta isn’t the only funder to put conditions on its investments. Earlier this year, United Airline announced it would invest $15 million in Eve Air Mobility, provided the Embraer-owned startup could hit certain technical and regulatory benchmarks. United also invested in Archer Aviation, while Boeing is backing Wisk Aero.