Why Insurance Breaks The Uber-In-The-Air Fantasy
Chatgpt generated: Insurance as another stake in the heart of cheap eVTOLs
May 3, 202610 seconds
Michael Barnard
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The most interesting person in the first commercial eVTOL launch may not be the pilot, the regulator, the mayor at the ribbon cutting, or the executive standing beside the aircraft. It may be the underwriter. The aircraft may have completed its test program. The regulator may have signed off. The vertiport may have a logo, the app may have a booking screen, and the investor deck may show revenue starting next quarter. Then someone has to answer the aviation question that marketing slides avoid. If something goes wrong over a city, who pays, how much coverage exists, what is excluded, what data does the insurer require, and what does the policy cost?
Insurance is another stake in the heart of the cheap eVTOL premise. Not because eVTOLs cannot be insured. They can be, and some already are for test flights and development work. Allianz Commercial has said eVTOL test flight insurance is already being provided. Apollo and Moonrock have launched an insurance facility for drones, eVTOLs, and aviation innovation with up to $100 million in liability capacity and $22.5 million in property damage capacity. Specialist aviation insurers are looking at advanced air mobility. The insurance market is not refusing to look at the category.
The problem is commercially useful insurance. A test flight policy is not passenger service insurance. A demonstration policy is not scalable urban liability cover. A press release saying an eVTOL operator is insured tells us little until we know the limits, exclusions, deductibles, covered routes, operating modes, insurer data rights, retained risk, and premiums. The cheap air taxi story depends on more than finding a policy somewhere. It depends on finding enough coverage, at high enough limits, with few enough exclusions, low enough deductibles, and low enough premiums to preserve the business case.
Novel risks get insured, but the first insurance for novel categories is rarely broad and cheap. Cyber, drones, rideshare, and satellite launch all found coverage before mature loss histories existed. The pattern is not that insurers refuse novelty. The pattern is that early coverage is narrow, conditional, data-hungry, expensive, and unforgiving of weak controls. For commercial passenger eVTOLs, that likely means yes, but. Yes, on these routes. Yes, from these vertiports. Yes, with pilots. Yes, with these weather limits. Yes, with battery health reporting. Yes, with flight data sharing. Yes, with these maintenance records. Yes, with this self-insured retention. Yes, with these exclusions. Yes, at this premium.
That is enough to support limited service. It is not enough to support cheap, spontaneous, citywide air taxis.
The underwriter is not pricing a clean aircraft rendering passing in front of a skyline. The underwriter is pricing a certified aircraft, a battery pack, a software stack, a pilot, a charger, a vertiport, a maintenance system, passengers, people below, weather, emergency response, product liability, premises liability, cyber exposure, litigation risk, and immature loss data. The aircraft is only one part of the risk.
The risk chain is messy. A battery event may involve the aircraft manufacturer, the battery supplier, the charger, the operator’s maintenance practices, the vertiport’s fire systems, and the emergency response plan. A software-related event may involve the OEM, operator, pilot, maintenance contractor, flight control system, navigation data, and update procedures. A vertiport incident may involve passenger handling, downwash, slips and falls, charging infrastructure, fire suppression, rooftop access, surrounding buildings, and local authorities. These are not impossible risks to insure. They are expensive risks to understand.
The lack of historical data matters because eVTOLs borrow from several categories without fitting inside any one of them. They are not helicopters with fuel replaced by electrons. They are not drones with passengers added. They are not airliners with smaller cabins. They are not taxis with wings. They are a new mixture of aviation, battery systems, software, urban infrastructure, and public liability. Analogues help, but none of them answer the full question. Mature insurance pricing needs commercial flight hours, sectors, passenger-miles, battery history, maintenance removals, vertiport incidents, passenger injuries, software anomalies, and claims. The first operators do not have that history.
Insurance hits the business case twice. First, there is the premium. Second, there are the operating restrictions that come with the policy. If the insurer requires fixed routes, specified vertiports, conservative weather minima, pilot qualifications, maintenance reporting, flight data sharing, battery monitoring, and high retained risk, it is not just adding cost. It is reducing the number of flights over which costs can be spread. Fewer flight hours mean fewer passenger-miles. Fewer passenger-miles mean higher cost per passenger. Insurance is not just a line item. It is a utilization limiter.
That matters because utilization is the whole eVTOL business case. A four-passenger aircraft carrying a pilot has to fly a lot, carry paying passengers often, and keep its seats filled. If it flies less often, if weather cancels more flights, if routes are limited, if the insurer narrows the operating envelope, if vertiports are scarce, or if passengers do not fill the seats, the cost per passenger rises quickly. Insurance does not have to be the largest cost to be a serious problem. It only has to be large enough, and restrictive enough, to damage utilization and margins.
The old Joby investor economics are a useful denominator. Its public investor materials assumed about 40 trips per aircraft per day, roughly 24-mile average trips, 2.3 passengers per trip, $3 per passenger seat-mile, about $2.2 million in annual revenue per aircraft, roughly $1 million in annual contribution margin per aircraft, and an aircraft payback of about 1.3 years in the mature case. It also included aircraft and insurance at about $0.09 per available seat-mile. That is not a casual assumption. It is a business case sitting on high utilization, good load factors, low operating friction, and cheap enough insurance.
At 40 trips per day, 24 miles per trip, and 2.3 passengers per trip, one aircraft produces about 806,000 occupied passenger-miles per year. At $3 per passenger-mile, that is about $2.4 million in gross fare revenue before platform adjustments, close enough to the investor-deck revenue case. If insurance costs $350,000 per aircraft-year, it adds about $0.43 per occupied passenger-mile, or about $10 per passenger on a 24-mile trip. If insurance costs $1.25 million per aircraft-year, it adds about $1.55 per occupied passenger-mile, or about $37 per passenger on that trip. In the optimistic utilization case, insurance is meaningful but perhaps survivable.
The problem is that early operations are unlikely to look like the mature, high-utilization case. Suppose the aircraft flies 20 trips per day and averages two passengers instead. Annual occupied passenger-miles fall to about 350,000. At the same $3 per passenger-mile, gross revenue falls to about $1.05 million. The pilot, aircraft, vertiport access, dispatch system, maintenance program, corporate overhead, and insurance do not fall by half because utilization is weaker. In that constrained case, $350,000 of insurance becomes about $1 per occupied passenger-mile, or $24 per 24-mile passenger trip. At $1.25 million, it becomes about $3.57 per passenger-mile, or $86 per trip. That is insurance alone.
Against a $3 per passenger-mile fare story, that is a problem. In the optimistic case, insurance in this range adds the equivalent of 14% to 52% of the fare. In the constrained case, it adds the equivalent of 33% to 119% of the fare. That is before aircraft capital, pilot cost, maintenance, battery depreciation, vertiport fees, charging, dispatch, ground staff, customer service, software, corporate overhead, reserve aircraft, and profit. Insurance is not the entire cost stack. It is the cost that reveals how fragile the stack is.
A 20-aircraft launch fleet flying 20 trips per aircraft per day produces about 146,000 sectors per year. That sounds like a lot, but it is still a thin dataset for rare, high-severity aviation events. Insurers can use analogues and engineering judgment, but they will not have the comfort that comes from years of commercial passenger operations across many routes, many cities, and many weather conditions. Until that history exists, the premium and the restrictions are likely to reflect uncertainty.
This is where the “Uber in the air” comparison collapses. Uber Black is priced per vehicle. eVTOL service will usually be priced per seat. A $150 Uber Black trip is a $150 vehicle trip. One passenger pays $150. Two passengers pay $75 each. Three passengers pay $50 each. Four passengers pay $37.50 each. A $150 eVTOL seat is different. One passenger pays $150. Two passengers pay $300. Three passengers pay $450. Four passengers pay $600. The car gets cheaper per person as the group gets larger. The aircraft scales by seat.
That distinction matters more when insurance premiums are high. A solo traveler on a congested airport route may compare a $150 eVTOL seat with an Uber Black ride and find the comparison reasonable. A couple, family, or business team sees a different price. The ground vehicle becomes much cheaper per person, and it remains door-to-door. The eVTOL is node-to-node. The passenger must reach the vertiport, pass through whatever passenger process exists, fly, land, and complete the ground leg on the other side. The time saving must overcome both the fare and the friction.
BLADE, whose CEO and COO I spoke with a few years ago and which was acquired by Joby recently, is the better comparator. Its New York airport helicopter service advertises Manhattan to JFK or Newark seats from about $195, with flexible products around $245 to $295 and private helicopter charters far higher. That is the existing aerial airport transfer market: premium, per seat or per aircraft, node-to-node, weather exposed, and aimed at travelers with a high willingness to pay. An early eVTOL fare of $150 to $300 for a 20 to 30 mile airport route fits that world. At $150 for a 24-mile route, the fare is $6.25 per passenger-mile. At $300, it is $12.50 per passenger-mile. Those are aviation shuttle numbers, not mass mobility numbers.
The New York alternative is subway and an airport shuttle train that takes a longer but is a lot cheaper. The only other scheduled market Blade services is Vancouver, and it doesn’t fly to the airport regularly because the subway goes straight there from downtown for around C$3, and subway stations are much more convenient than the waterfront helipad. As Enrique Peñalosa, former mayor of Bogotá said, “A developed country is not a place where the poor have cars. It’s where the rich use public transportation.” That’s very true of the urban air mobility market as well.
The fare may be lower than some helicopter options. The aircraft may be quieter. It may be cleaner at the point of use. Cities may prefer it to turbine helicopters if noise and safety are acceptable. Airports and airlines may see value in premium connections. Premium travelers already pay $150 to $300 for ground or air options when time matters. There is a business there.
But it is not the business that the phrase Uber in the air suggests. It is closer to BLADE with batteries: per-seat, premium, limited, node-to-node, weather exposed, and dependent on cautious insurance. The first viable services are likely to be airport shuttles and a few high-income corridors, not cheap citywide ride hailing.
Across my publications on urban air mobility and eVTOLs, I have consistently argued that the sector’s core weakness is not whether small electric aircraft can fly, but whether they have a scalable business model. The 2021 “solution in search of a problem” pieces framed air taxis as an inflated niche built on declining helicopter-market analogues, weak maintenance and infrastructure assumptions, and obvious cheaper ground alternatives. Later pieces on EHang, Lilium, Volocopter, Supernal, and the broader eVTOL deathwatch extended that argument as companies ran into insolvency, certification delays, downwash and vertiport constraints, capital exhaustion, and thin real-world demand. The through-line is that UAM promised mass urban mobility but kept retreating toward a small premium airport-shuttle or wealthy-user niche, closer to BLADE than Uber.
Insurance now fits as another commercial reality check. The underwriter will not stop every eVTOL from flying. Insurance will be placed. Policies will be written. Launch flights may happen. The point is sharper than that. Insurance is another stake in the heart of the cheap eVTOL premise because it makes the whole cost stack visible. The underwriter prices the optimism that the renderings hide.
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