Ampaire tested its hybrid electric drive in a unique Cessna 337 Skymaster … [+]
Ampaire is among the many electric aircraft startups aiming to change the way we move in the air. It excelled through what appeared to be a short-term practical approach, working to develop a hybrid electric propulsion system that could be used in small turboprop aircraft to replace their internal combustion engines. Now it is being taken over by one of the small regional airlines that is one of its target customers: California’s Surf Air Mobility.
It’s an ambitious move by Surf Air CEO and owner Sudhin Shahani, who has been working since 2014 to break into a Netflix-style subscription service that allows customers to fly as much as they can in small private planes for a monthly fee they want airports in California and Texas. His bet is that hybridizing these aircraft will bring costs down enough to make them a cheaper option for driving or flying commercial aircraft for trips between 50 and 500 miles, and allowing a wide expansion of routes and frequencies.
“We believe that together we can drive the mass adoption of hybrid electric aircraft on a large scale,” says Shahani.
Surf Air is paying around $ 100 million from its own shares to get a 100% stake in Ampaire. The currency is based on Surf’s plans to go public later this year. 38-year-old Shahani has yet to clarify whether Surf Air will make a reverse merger with a specialty acquisition company, a direct listing, or a traditional IPO. However, the company provided $ 200 million in funding from the Luxembourg-based Global Emerging Markets Group contingent to go public in August.
Kevin Noertker, CEO and Co-Founder of Ampaire, says his first-series hybrid electrical system reduced fuel and maintenance costs by 25% to 30% for small workhorse planes like the Cessna Caravan and DHC Twin Otter, which take between nine and 19 passengers % lower than conventional versions without affecting the range. He aims to win an additional FAA model certificate for the first aircraft model to be converted in 2023. Passenger service will begin in 2024.
The price of retrofitting an aircraft with Ampaire’s hybrid powertrain is the same as what owners are already paying to overhaul a turboprop engine, which typically occurs every three to five years, says Shahani.
According to Noertker, the decision to be acquired by Surf Air was based on a shared vision of how hybrid aviation could be scaled. “I knew from the start that I had to work closely with the airlines,” says Noertker. “To take full advantage of electrification, it’s not just about aircraft. It’s how you get people to buy tickets on these planes, who is going to serve them, how you open new routes, what airports you go to. If you don’t have an efficient and coordinated solution in all of these areas, you have additional friction in reaching this scale. “
The fact that a customer buys Ampaire and owns shares raises questions for Richard Aboulafia, an aerospace analyst with the Teal Group.
“I tend to get skeptical of deals like this for the simple reason that if the technology is so compelling, why doesn’t it attract money from people?” Asks Aboulafia, “If it’s such an important technology for Surf Air, why isn’t it an important technology for other people and why aren’t investors funding it appropriately?”
Surf Air’s vertical integration also raises questions about whether it will be able to meet the capital costs of both developing Ampaire’s technology and building its air traffic network.
Noertker says it will cost about $ 50 million to get Ampaire’s first hybrid system through FAA certification, but that it will cost less to develop versions for subsequent aircraft.
Shahani has tried several approaches with Surf Air, including a short-lived European expansion. In 2020 he bought BlackBird, an app-based marketplace where private aircraft owners can charter their aircraft so that Surf Air can continue to expand – Demand flights to complement scheduled services with its fleet of 10 Pilatus PC-12 aircraft and operators with whom it subcontracts granted.
Around 2,000 aircraft are currently available on the on-demand platform. Shahani intends to encourage its owners to drive hybrids and make Ampaire’s technology more widely available for both retrofit and new aircraft.
While Surf Air says it got around a tough point in 2018 where the IRS hit it with liens for $ 2.3 million for unpaid taxes and a former operator of the company’s aircraft for 3.1 million Sued US dollars for unpaid bills, it has not yet reached profitability.
According to Shahani, the company has a “profitable unit economy on all our routes” but remains in the red due to investments in growth. He says Surf Air’s subscription model helped it keep up better than traditional airlines amid the decline in travel in the pandemic – customers continued to use Surf to fly to vacation homes, albeit less frequently while traveling Complaint has increased about smaller, less crowded airports.
The question is whether hybrid aircraft will enable a boom in regional air traffic. While a 25% to 30% reduction in fuel and maintenance costs would be significant (and Noertker says 40% to 50% could be achievable across the board with plug-in versions of Ampaire technology), this is just one Part of the cost puzzle for airlines with high fixed costs in payroll, infrastructure and aircraft. Labor costs accounted for 32.3% of US airlines’ operating costs in 2019, the largest single component according to Airlines for America, followed by fuel at 17.7%.
Having good scheduling software to ensure planes are full might be more important with an on-demand model and avoid the dreaded empty “deadhead” flight of getting a plane into position to pick up customers, says Aboulafia.
“How much you pay in fuel relative to your electricity is part of it, but how much revenue you make relative to the cost of flying people depends on the airline’s traditional economics,” he says.