The growing order backlog for future air mobility aircraft

The future air mobility (FAM) industry now has orders in hand for more than 18,000 aircraft, representing an estimated $111 billion in sales (exhibit).1 In terms of volume, that exceeds the order backlog for commercial aviation: 16,500 aircraft (14,300 firm orders and 2,200 options).2 The industry is justifiably proud of that backlog, yet two caveats are in order. First, there were only 1,400 orders received in 2023 through June 9; this is 67 percent lower than the 4,400 placed in the second half of 2022. Second, some, or possibly most of those orders may not pan out.

The FAM order backlog now exceeds 18,000 aircraft

Airlines are the customer type that are placing the most orders, both in the past 12 months (23 percent) and in the cumulative total for the industry (29 percent).3 They are followed by business-aviation operators (14 percent of orders over the past 12 months and 11 percent of cumulative orders), and aircraft leasing companies (9 percent and 10 percent respectively).

Regarding FAM market segments, 2023 has seen an increasing share of orders for sustainable aircraft (from 29 percent in previous years to 37 percent in 2023) and drones (18 percent to 23 percent in 2023).4 The segment that is currently seeing less recent activity is passenger electric vertical takeoff and landing (eVTOL) aircraft (53 percent of previous years to 39 percent in 2023). This could be for a variety of reasons including, but not limited to, saturation of the early production capacity and choices in business models such as OEMs operating their own aircraft in early operations.

Risks to the order backlog

Although the size of the current order backlog is notable, the durability of those orders remains in question. Less than 1 percent of all orders mention any type of aircraft deposits or pre-payments. Just over half (51 percent) are firm orders and the remainder are letters of intent (LOI) and options.5 In addition, many orders are contingent on OEMs achieving specific technical milestones such as test flights, conforming prototypes, or type certification. In contrast, commercial aviation orders—where aircraft are already certified—typically do not depend on uncertain future technical milestones. Consequently, delays in FAM aircraft development could lead to a reduction in orders, potentially putting OEMs at risk.

In the past, many commercial aircraft OEMs held respectable orders books but later ceased operations due to financial struggles. Further, even if the current orders hold, production could take some time to ramp up, for reasons that include supply chain delays, talent shortages, or quality issues—as we are seeing right now across the aviation industry.

Despite risks, the long-term outlook remains strong

FAM manufacturers have reason for optimism, but they should avoid breaking out the champagne just yet. We think the industry will continue to face challenges, and some order cancellations can be expected. Some companies could go out of business, as the industry matures around a smaller number of winners with proven technology and winning business models. One thing is certain: it’s going to be an interesting decade for FAM players.

Saskia Boeck is a consultant in McKinsey’s Munich office, where Stephan Lidel is a senior capabilities and insights analyst, and Ann-Sophie von Gaisberg is a consultant; Sarina Carter is a consultant in the Waltham office; Tore Johnston is an expert in the Denver office, and Robin Riedel is a partner in the Bay Area office.

1 The FAM industry includes eVTOL, sustainable aviation, super/hypersonic aircraft, and cargo/delivery drones.
2 Commercial aircraft includes wide-body, narrow-body, regional jet, and regional turboprops.
3 Quantity of orders.
4 Conventional takeoff and landing (CTOL) aircraft powered by battery electric, hybrid electric and hydrogen fuel cell, and combustion powertrains; surveillance and delivery drones.
5 Orders are assumed to be firm unless otherwise noted.

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