You can also afford to "Feidi" now

Author | Chai Xuchen

Editor | Zhou Zhiyu

"Traveling 20 kilometers in 5 minutes, with a single-seat cost of 60 RMB, at around 3 RMB per kilometer, the cost is almost the same as taking a taxi," Huang Xiaofei, Senior Vice President of Shanghai Volant Airlines, describes a very attractive "flying ride" mode.

Just like the disruption caused by new energy vehicles to the industry, changes are also happening in the aviation industry after electrification.

The emergence of electric vertical take-off and landing aircraft (eVTOL) has provided a solution to the cost issue that previously limited the commercialization of low-altitude air traffic and made it accessible to ordinary people. The era of "flying rides" that everyone can afford seems to be just around the corner.

Huang Xiaofei told Wall Street News that the previously high barriers of turbofan engines and aviation materials have been replaced by motors and composite materials. After overcoming the biggest shortcomings, in the field of low-altitude flight, aircraft safety, efficiency, and costs have been optimized tenfold. An analyst from Guosheng Securities told Wall Street News that the manufacturing costs of helicopters, which used to be tens of millions to hundreds of millions, can now be compressed to within a million RMB with eVTOL.

Huang Xiaofei believes that with the generation of economies of scale in the future, there is still a 30-40% room for cost reduction for aircraft. McKinsey predicts that if eVTOL is widely adopted, the operating cost per available seat mile can be reduced to $0.5-2.5, much lower than the current operating cost of $6-8 per seat for helicopters.

The imagination of the low-altitude economy is constantly expanding. Huang Xiaofei mentioned that scenic spots can offer aerial sightseeing, cargo transportation can be used for air logistics, in urban areas it can be Air Taxi, and in hospitals it can be used for emergency medical rescue.

When ultimate efficiency and cost intertwine, the enthusiasm for the low-altitude economy is quickly ignited, revealing the imagination space of a trillion-dollar market.

Li Jian, former Deputy Director of the Civil Aviation Administration of China, stated that the scale of the low-altitude economy is roughly 3.2 times that of the high-altitude economy. The economic volume of China's existing civil aviation high-altitude transportation network is 17 trillion RMB. Calculated, the volume of the low-altitude economy can reach 50 trillion RMB, while China's GDP last year was 126 trillion RMB.

Looking domestically, there are not many industries with such a huge volume and significant development space. This may be an opportunity for China to overtake on a curve.

Huang Xiaofei pointed out that low-altitude flight has a 1:13 industry driving force, and aircraft companies as the leading companies in the chain directly or indirectly drive incremental value in industries such as tourism, manufacturing, and insurance. As the leading company in this trillion-dollar industry chain, aircraft manufacturers have quickly become a sweet spot in the eyes of investors.

On March 5th, Volant Airlines announced the completion of a 100 million RMB Series A financing round. "Recently, we have contacted at least two hundred foreign government platforms or institutions, and receive two to three hundred market research visits every week," Huang Xiaofei said frankly, "Many people think that now is an economic downturn, but in this industry, you can feel the strong enthusiasm of the Chinese economy. Suddenly, a small company is standing in the center of the stage." The imagination of the huge scroll is rapidly unfolding. However, to successfully commercialize eVTOL, it is not enough to just build the aircraft. Airworthiness certification is a prerequisite for eVTOL to start commercial operation. According to regulations, obtaining civil aircraft airworthiness qualifications mainly involves airworthiness certification such as design approval (TC), production approval (PC), airworthiness approval (AC), etc., which is a period of more than 5 years.

In addition, analysts from Guosheng Securities pointed out that although there are few bottlenecks for eVTOL, the core links of flight control and motor still rely on foreign supply. For example, the motor quotation provided by Sai Feng is as high as 200,000 euros.

Faced with considerable time costs and the difficulty of supply chain integration, how does the quasi-unicorn company Volant, which has already secured 700 orders, think and break through? Recently, Wall Street News had an in-depth conversation with Huang Xiaofei.

The following is a conversation with Huang Xiaofei, Senior Vice President of Shanghai Volant Aviation (edited):

Q: Why has low-altitude travel suddenly become popular in China, and what kind of demand space exists?

Huang Xiaofei: Our eVTOL aircraft can fly 20 kilometers in 5 minutes for only 60 RMB, which is not much more expensive than taking a taxi at 3 RMB per kilometer. This is more than 2-3 times the efficiency improvement of new energy vehicles. After mass production in the future, it is expected that there will be a further 30-40% cost reduction. If such costs are acceptable to the public, eVTOL can enter ordinary households.

Moreover, this cost structure can be used for sightseeing in scenic spots, air logistics with cargo, Air TAXI in urban areas, and emergency medical rescue in hospitals. The same applies to infrastructure. For example, in the tourism industry, it used to cost one billion to build one kilometer of road, but now an eVTOL take-off and landing point only costs 1 million RMB, greatly reducing infrastructure costs.

Q: How does eVTOL achieve such a significant cost reduction?

Huang Xiaofei: Because the shortcomings no longer exist. Previously, there was a 30-year technology gap in aviation turbofan engines with the United States, and a 10-year technology gap in materials. Now, we no longer use engines, but motors; we no longer use the original basic materials, but composite materials. In addition, the basic elements of the industry have changed tenfold, and after the C919, we have reserves of high-end talents, and the three electric and new energy industry chains have great advantages.

Therefore, after the electrification of aircraft, engine design has been simplified, the number of components and maintenance workload have been reduced, and the reliability of key components such as motors is higher. This has brought about a tenfold change in safety, cost, and efficiency, with a significant reduction in ticket prices from 6,000 RMB to 30,000 RMB per hour.

There has been a huge turning point in this process. In a recent government work report, low-altitude economy is seen as a new growth engine, with high expectations. Recently, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the Civil Aviation Administration jointly issued a document pointing out that existing infrastructure will be conveniently renovated, and shopping malls will be encouraged to install electric charging stations to increase infrastructure coverage Question: Where does the underlying driving force for the country to promote the low-altitude industry come from?

Huang Xiaofei: First of all, it is on the demand side. We have a significant gap with foreign countries. The stock of aircraft in China is only 2% of that in the United States, and the number of airports for manned flights is only 1% of that in the United States. However, China's population is four times that of the United States, and the land area is basically the same. After dividing by 4, we only have 0.25%-0.5% of what the United States has. This is not commensurate with China's economic and social status.

Low-altitude flying has a 1:13 industry driving force. Aircraft companies, as leading enterprises in the chain, directly or indirectly drive industries such as tourism, manufacturing, and insurance to release incremental value. For example, in the tourism industry, low-altitude flying can expand the range of activities. China has over 13,000 scenic spots, with over 4,300 of them rated 4A. With low costs, the conversion rate is large enough, which can solve the problem of local economic development.

One dollar leverages more than ten times the return, and it quickly realizes the aggregation of industries. This is also why the country is willing to subsidize routes and airport repairs in this field.

Question: Is there a real demand in the market, and what advantages does Volant have to become a unicorn in the industry?

Huang Xiaofei: Currently, the market is in short supply, and even customers are urging us to deliver aircraft. The demand on the B side is still very strong. Many people think that we are in an economic downturn now, but in this industry, we can feel the strong enthusiasm of the Chinese economy. This is the best time for entrepreneurship, and suddenly a small company is standing in the center of the stage.

According to the plan, it is expected to enter trial operation in 2025. After completing certification in 2026, we will start formal delivery of about 15 to 20 aircraft. We are building a factory with an annual capacity of 100 aircraft, aiming to start mass production in 2027 or 2028, as we currently have 700 intended orders on hand. Profitability is only a matter of time, and it is expected to be achieved around 2027 or 2028.

Question: What potential and advantages does Volant have in this track to gain investor recognition?

Huang Xiaofei: Firstly, during the trial flight process, the biggest difficulty lies in the long time required for airworthiness certification. Our team has been working hard for over three years, and it is estimated that it will take nearly two more years to complete this project. If the team is transitioning from other industries, it may take even longer.

In addition, there is a shortage of resources for official approval. We have cultivated some representatives of the Civil Aviation Administration, who can represent the authorities in reviewing and approving. Ensuring the smooth progress of the review work is also our advantage. Nevertheless, we still hope that the authorities can invest more resources to support leading companies in competing with overseas companies.

Regarding market demand, we can achieve differentiation through product positioning and design parameters, building barriers. Because the design of an aircraft cannot be modified later, it is necessary to deeply understand customer needs in the early stage. The eternal pursuit of the aviation industry is safety, followed by efficiency and cost.

For example, China Southern Airlines hopes to solve supply chain bottlenecks with products that have lower costs and higher efficiency. They have had some aircraft parked on the ground for one or two years because they couldn't get engine parts on time. AJet Aviation, which specializes in short-haul transport, aims to operate independently of government subsidies. Therefore, whether it is the choice of different aircraft configurations or different technological routes, they must not deviate from the true user value Q: What are the steps required by Volant after obtaining TC certification?

Huang Xiaofei: TC (Type Certificate) is the most difficult and prestigious certification. Next, we need to obtain PC (Production Certificate), and in the future, it will depend on our partners to obtain Operation and Maintenance Certificates. The seamless connection between the two sides is a prerequisite for the official operation of low-altitude aircraft entering the public eye.

The entire audit process takes about 5 years, mainly because the experimental stage requires the manufacture of several aircraft for flight verification. The process involves simulations, calculations, test flights, and other methods to demonstrate that the aircraft meets the specified environmental and functional conditions. There are no technical difficulties, just a matter of reaching the final destination in time, as the most critical materials and power constraints have been overcome.

Q: What are the bottlenecks faced by the low-altitude flight industry currently?

Huang Xiaofei: Firstly, key component manufacturers such as electric motors lack sufficient airworthiness approval experience. Collaboration with suppliers also involves issues such as research and development investment and risk sharing. This requires leading aircraft manufacturers to establish a mechanism for sharing risks and benefits, which will take time. Therefore, leading companies are facing challenges.

Comparatively, foreign countries already have more mature systems. For example, SAFRAN is experienced in aero engines and electric motors. When the opportunity for low-altitude aircraft arises, they may establish a department with 20 people to start research and operations, while domestically it may require 50 to 60 people for preliminary discussions and research. However, we are also in the process of accelerating our catch-up.

Q: Is the implementation of autopilot in aircraft similar to current civil aviation autopilot systems?

Huang Xiaofei: Aircraft currently have autopilot functions such as auto-throttle, thrust reduction, and automatic speed control, but these are aimed at reducing the workload of pilots rather than achieving fully unmanned flight. True unmanned flight is expected to appear around 2035, but before that, different levels of autopilot and driver assistance functions will be implemented.

Q: Will eVTOL follow a similar development concept of platformization like in the automotive industry to improve iteration efficiency?

Huang Xiaofei: Aircraft is also a basic platform that can be applied to different scenarios and models through design and modification. By adopting Huawei's IPD concept, a project management mechanism can be established, and operational documents and capabilities derived from the platform can be reused.

Q: Does the company consider full-stack self-research in the future?

Huang Xiaofei: Currently, the company has just over 50 employees and focuses on what it is good at, fully utilizing the Chinese supply chain to avoid blind competition and gaming. The civil aviation industry does have a clear division of labor. Aircraft is a system engineering project, although components are simplified, the number of suppliers may decrease by an order of magnitude, but they still need to be involved. We need to leverage the advantages of the Chinese supply chain to drive industry development.

Q: When will unmanned driving technology land on aircraft? Huang Xiaofei: There will be a certain level of autonomous driving function in the civil aviation field, mainly aiming to reduce the burden on the flight crew, lower the probability of errors, enhance operational accuracy, and improve passenger comfort. At the current stage, the focus may be more on assisted driving, including non-precision approach and precision approach. However, in the future, with technological advancements, higher levels of automation such as satellite-guided landing are expected to be achieved, directly enabling overtaking on curves