Until recently it was the stuff of science fiction: flying taxis, ferrying customers easily above congested metropolitan landscapes. As Jeremy Hughes discovers, with the world’s cities increasingly prone to gridlock at ground level, the only way may indeed be up

What was once the stuff of science fiction is to become a reality, as flying taxis are coming soon to a rank in the sky near you. The urban air mobility space is predicted to experience exponential growth, with revenues projected to surge from £800 million in 2030 to £72 billion by 2050, according to Allianz Aviation, accompanied by an anticipated deployment of 160,000 passenger drones worldwide.

Already, cargo and parcel transport companies are using electric vertical take-off and landing aircraft for middle- and last-mile package delivery. Police and fire departments use drones for monitoring events from the air, while a number of sectors deploy unmanned aerial vehicles for cost-effective infrastructure and environmental monitoring. Compellingly, these solutions come with zero emissions – a draw for organisations tasked with reporting their environmental impacts. The next step, transporting humans, could revolutionise medical and emergency transport, with taxi services an increasingly viable option.

According to McKinsey, by 2030, the leading companies in the passenger advanced air mobility sector could have bigger fleets – and offer more flights per day – than the world’s largest airlines. Flights will be shorter, it says, averaging just 18 minutes, and with fewer passengers.

Yet it is axiomatic that the exciting possibilities sparked by new technologies bring a raft of fresh hazards which require management if the benefits are to be fully realised. Matters of cost, supply chains and standardisation can be entrusted to economies of scale – but achieving such scale requires several key factors to fall into place.

In terms of the Technology Adoption Lifecycle identified by American sociologist Everett Rogers, many technologies fail to cross a “chasm” between early adopters and the early majority of users. Widespread acceptance of new, unprecedented services requires public trust – and winning over a cautious public requires a combination of assurances, from overcoming initial mistrust of technology to becoming comfortable with extensive financial implications.

Bringing sophisticated products to market safely will be costly: Gopal Rajaraman, senior investment manager at Lockheed Martin Ventures, estimates, it takes “US$1 billion and a long time” to finance an advanced air mobility company. Market-leading US developers Joby Aviation and Archer Aviation both floated on the New York Stock Exchange in 2021, but have traded below their listing prices for much of the time since. Both have raised further capital, but still require more as they approach their planned entry into service dates.

The year 2021 marked the high-water mark in AAM funding, with £4.8 billion invested across vehicle development, avionic systems, powertrains and infrastructure. Thanks to high interest rates and economic headwinds, available capital nose-dived in 2022 to £3.44 billion and £1.52 billion in 2023, according to Alton Aviation Consultancy.

Alongside successful product development, investors are looking for progress in regulation for the new market, consolidation among AAM tech companies, and “a clear roadmap to mitigate risks around [each] vehicle and broader company,” Alton says.

Rules and regulations

Legislators and regulators have a key role to play in creating the systems that will integrate AAM products and services into existing transport safety infrastructure. Changes are happening as recreational and commercial drones become more common, either by adapting existing frameworks or by creating new rules specific to novel use cases.

In June 2022, the European Union Aviation Safety Agency published the world’s first comprehensive proposal for operating air taxis in urban environments. That same year, the US government enacted the Advanced Air Mobility Coordination and Leadership Act, followed by the US Federal Aviation Administration’s Innovate28 plan to safely enable AAM operations by 2028. And in the UK, the Department for Transport unveiled its Future of Flight action plan in March 2024.

Alongside regulatory guiderails, comprehensive physical infrastructure will also be needed to facilitate safe AAM services, including demarcated routes and ‘vertiports’ for charging, take-off and landing. While operators may use existing airports and heliports for proof-of-concept operations, scaling new businesses is likely to demand a network of these new vertiports, especially in populated areas.

The human element

Even if the infrastructure is secured, are potential end-users ready to embrace pilotless air travel? Developers are unanimous that ceding responsibility for navigation, negotiating traffic, and emergency decision-making to advanced sensors and software will be safer than leaving these functions in the hands of fallible humans, but potential passengers aren’t yet convinced. A survey from PwC suggests that, while a majority of the population would support the application of drones for disaster relief (85 per cent), agriculture (77 per cent) or border security (67 per cent), the approval rates for B2C cargo drones in cities (48 per cent) or air taxis (39-45 per cent) are currently much lower. To start with, consumers are increasingly aware of the hazards associated with lithium-ion batteries, which can be susceptible to combustion if damaged or mismanaged.

Risky business

Technical challenges aside, prospective service operators will need solutions to numerous potential hazards associated with running an AAM-based business. For example, eVTOL aircraft and equipment are expensive, with manufacturers and operators exposed to substantial losses from damage or destruction. Comprehensive damage cover is needed across the spectrum of AAM technologies, including eVTOL test flights, drone fleet operations, and ground control infrastructure.

A greater area of concern is ascertaining responsibility for the impacts of these new services on third parties.

In conventional vehicle accidents, the driver is usually held responsible. But as human control decreases, liability is increasingly likely to attach to manufacturers and software developers. This is where the rubber meets the road when considering the future of AAM technologies. While the area remains undeveloped, with risk models still to be tested and liability therefore uncertain, insurance costs will be higher, adding to costs for developers, service operators and end-users.

As with regulation, though, adaptations to existing aviation policies and specialist new products are emerging to smooth the path for AAM businesses. For example, Gallagher Specialty, which provides cover for airlines and related businesses, groups eVTOL services with a range of aerospace businesses. “Everyone talks about AAM in terms of...pilotless passenger drones,” says Paul Curtis, partner, Gallagher Aerospace. “But as we’ve realised, AAM encompasses all classes from electronic aircraft to space tourism to supersonic flight, and the technology just keeps evolving.”

Others, such as Advanced Technology Assurance, are developing highly specialised policies. “From pre-certified test aircraft in challenging flight test regimes to commercial passenger operations at scale, the ATA policy is structured specifically for eVTOL and electrified aircraft,” says Alastair Blundy, lead underwriter at ATA. “Where traditionally a policy might define a unit in the context of an engine burning kerosene on the wing, our new policy defines a unit in the context of the battery system, high voltage architecture, or hydrogen fuel cell stacks.”

Generating lift

Scale will help here, too: with increasing adoption will come more data and better risk insights, enabling more accurate and nuanced modelling. With increasing adoption, a transition to profitability, and subsequent sector expansion, it is likely that underwriting for AAM companies and their operations will become more standardised.

AAM-based services may seize the imagination with their sci-fi looks and earning potential, but the risks inherent in the new technology are keeping developers, regulators and underwriters busy at their desks. Before we trust life, limb and capital to pilotless electric aircraft, the sector must evolve into a position where the benefits outweigh the risks. Only then can the technology soar free of the current ‘chasm’ it currently occupies.



This article was published in the Q2 2025 issue of CIR Magazine.

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