Shari B. Domow Bacsardi,
Partner,
Womble Bond Dickinson

Dillon A. Redding,
Associate,
Womble Bond Dickinson

Alexander R. Lowitt ,
Associate,
Womble Bond Dickinson

Electric aircraft have the potential to usher in an exciting new era of travel. Electric vertical takeoff and landing aircraft (eVTOLs), a particular subset of electric aircraft, have recently emerged as the leading developing technology in the industry, with investment and development rapidly increasing over recent years. Much like a helicopter, eVTOLs take off and land from a singular point vertically but glide horizontally like an airplane. eVTOLs could excel in several important areas, including:

• Safety: Many eVTOLs are designed with multiple propulsion solutions (up to 18 rotors) as compared to a helicopter’s single rotor. Further, many eVTOLs utilize advanced autonomous flight control systems to negate pilot error.
• Manufacturing Costs: Unlike conventional helicopters, eVTOLs utilize electric motor driveshafts attached directly to fan blades, thus bypassing the need for transmissions. This design could drastically reduce production costs, especially considering many current eVTOL concepts contain a similar, if not identical, type of motor.
• Operational Expenses: While battery life continues to be a concern, as with all electrical transportation, electrification is one of the largest draws of eVTOLs. Electric power is cheaper and cleaner than operating gas turbines, and it reduces carbon emissions across the globe.

Revolutionizing Air Travel

As eVTOLs may generate more travel opportunities for individuals, companies and governments alike, one can easily see the intrigue and opportunity that this technology presents to revolutionize society. Many companies have already invested billions of dollars into the research and development of electric aircraft in what has the potential to become a multi-billion-dollar industry that could transform air transportation as we know it. These recent developments in the aviation industry coincide with an increased emphasis among leading companies in various industries to invest in electric-powered transportation fleets. Such focus on ground transportation and the electric motor vehicle industry in the United States would support the growth of eVTOLs once widely approved, manufactured and utilized.

Regulatory Hurdles

Further, the Inflation Reduction Act has ushered in a renewed focus on green initiatives, specifically electric vehicles and the lithium batteries that power them. This focus may soon extend to electric aircraft (some of which are designed around lithium batteries), shining a beacon of light on novel developments in the aviation industry. However, despite the growing interest and investment in electric aircraft, the certification process at the Federal Aviation Administration (FAA) has had a turbulent ride.

Until recently, major electric aircraft developers expected the FAA to utilize type certification under Part 23, the traditional pathway to certify small airplanes. This “traditional pathway” of obtaining certification under Part 23 includes demonstrating an aircraft’s airworthiness (center of gravity, takeoff performance, thrust, etc.) and proving the aircraft conforms with regulations concerning structure, design, construction, power and equipment, among many other stringent but predictable requirements. However, in early May, the FAA announced it was modifying the regulatory approach for eVTOLs, ruling that eVTOLs met the FAA’s definition of “powered-lift.”

This technical interpretation means that eVTOLs cannot be certified or operated as “airplanes” but rather as a “special class” under 14 C.F.R. § 21.17(b), the statute for special classes of powered-lift aircraft. Perhaps unsurprisingly, leaders in the electric aircraft industry met this announcement with trepidation. Many manufacturers of eVTOLs have been operating under the assumption that eVTOLs met the FAA’s definition of an airplane and could be treated as such for both operational and certification purposes.

Certification under Part 21.17(b) has proven uncertain in the past. The Leonardo AW609, a conventionally powered tiltrotor that came before the FAA for certification nearly a quarter century ago, was categorized by the FAA under Part 21.17(b). To this day, it still has not been certified by the FAA.

Further, the FAA’s public announcements concerning these changes have not provided much comfort or clarity. The FAA’s designation of eVTOLs as powered-lift aircraft reached the aviation industry through media reporting instead of an official announcement. The FAA’s subsequent public response has attempted to downplay concerns, noting that while some regulatory changes are in the works, it would not completely abandon the Part 23 framework and any regulatory changes would focus more on flight crew training and operational requirements.

While this response has highlighted that the FAA does not envision monumental change, a primary concern within the eVTOL industry was left unaddressed: the FAA’s timeline for new rules and regulations. If the upcoming regulatory changes truly are minimal and much of the work preparing for certification under Part 23 can largely be incorporated into the existing regulatory framework, then there may not be a substantial delay in the advancement of the eVTOL industry. However, other than general statements by the FAA confirming that new regulations are under consideration, there has been no official word on what the regulations may be or when they will be released. This lingering lack of information is both daunting and problematic, as many eVTOL aircraft manufacturers are startups with investors and promised revenue streams tied to specific timelines.

While some ramifications of the FAA’s recent decisions will not be clear for some time, some changes are already apparent. The FAA’s stated primary goal around these certification changes centers around pilot training. Notably, eVTOL pilots will likely need to spend more time and money to receive additional ratings and certificates for powered-lift aircraft than what is otherwise required for conventional small aircraft. This focus on pilot certification may prove worthwhile for this unicorn aircraft — in fairness, eVTOLs uniquely take off like a helicopter, transition toward something close to an airplane to fly and then transition back to a helicopter for landing. The short-term plan is to type certify powered-lift eVTOLs under the FAA’s “special class” 21.17(b) process while also using the established performance-based airworthiness standards of Part 23. This could change in the future, and additional rules and requirements could arise under a more complete regulatory framework, potentially contradicting significant efforts made by the industry to conform with current expectations. In sum, there is still a path toward eVTOL certification, and the FAA may certify them in 2024. However, this recent shift in the classification of eVTOLs has caused some uncertainty in the electric aviation industry. And with the Leonardo tiltrotor as a cautionary tale, the industry is surely hoping for no more surprises between now and 2024.

Key Takeaways:

• eVTOLs are an emerging technology garnering increasing interest and investment. With functionality similar to that of a drone, eVTOLs can take off and land vertically like a helicopter and glide like an airplane, utilizing electricity and battery power.
• The FAA recently ruled that eVTOLs meet the definition of “powered-lift” aircraft, barring eVTOLs from obtaining airplane certification under the anticipated pathway, 14 C.F.R. Part 23.
• The FAA has reassured the electric aviation industry by doubling down on its previously stated goals of certifying eVTOLs by 2024. However, that date has been called into question given the FAA’s pace thus far.
• The FAA’s short-term plan is to certify powered-lift eVTOLs under its “special class” 21.17(b) process while also using the established performance-based airworthiness standards of Part 23.

Shari B. Domow Bacsardi is a partner in Womble Bond Dickinson’s capital markets practice group. Domow Bacsardi represents lenders and lessors in all aspects of equipment finance transactions with an emphasis on transportation assets, including aircraft (corporate and commercial), rail equipment, locomotives and railcars, vessels (barges and tankers) and specialty assets.

Dillon A. Redding is an associate in Womble Bond Dickinson’s capital markets practice group. Redding also represents lenders and lessors in equipment finance transactions with an emphasis on transportation assets, such as aircraft, rail equipment, vessels and other assets.

Alexander R. Lowitt is an associate at Womble Bond Dickinson. He focuses his practice on commercial finance transactions, including equipment finance transactions.