The UAE Just Inspected Archer's and Joby's Aircraft in Person. Here's Why Dubai, Not the FAA, Could Deliver the First Paying Passenger.
The regulations around aircraft in the United States are very strict. That makes complete sense, given that accidents can cause material loss of life. But it often means that things take longer to get done in the United States than in other countries. That's not unusual, since that same thing holds true in the healthcare sector. And that's why the UAE is likely to be the first place where Joby Aviation(NYSE: JOBY) and Archer Aviation(NYSE: ACHR) operate their air taxi services. And it could happen as early as this year. Here's what you need to know.
You can't fly commercially without approval
Even in the UAE, you can't fly a plane commercially without getting a host of approvals. So there are no shortcuts being taken. Both Joby and Archer have spent years developing their electric vertical take-off and landing (eVTOL) vehicles. They have been testing them, as well, attempting to prove to regulators that they are safe and reliable.
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Part of the issue, however, is that eVTOLs are a new technology and there's no clear path to regulatory approval. These two industrials and regulators aren't exactly "making it up as they go," but they are working together to create guidelines that didn't exist before. Nobody wants to see an accident occur that could have easily been avoided. Which means that the approval process has been, well, a slow one.
The United States isn't exactly dragging its feet, noting that the federal government is backing eVTOL technology. Archer even has plans to provide eVTOL services at the 2028 Olympics, to be held in California. There is a path toward U.S. approval clearly shaping up. But, just like with many medical devices, the first step is likely to be approval in a non-U.S. market.
This was the plan all along
For investors watching Joby and Archer, this isn't shocking news. In fact, both companies have long planned to start commercial operations in the UAE. And that process appears to have taken a giant leap forward, with the UAE recently holding meetings with both companies. There's no guarantee of a commercial start date for either business, but before the end of 2026 is a very real possibility.
First commercial flight would be a huge step for either company, even if it slips into early 2027. However, it is important to remember that the first commercial flight will just be the first step. It won't be clear if there is enough demand to support what amounts to air taxis until the aircraft are approved. Even then, there's still a lot of work to be done.
Running a large air taxi service is only possible if Joby and Archer can successfully ramp up production of their respective aircraft (the S4 and Midnight, respectively). Building aircraft at scale is expensive and complex, so investors should expect both companies to continue bleeding red ink for the foreseeable future. That will remain true even if investors get excited and bid up the stocks after each company's first commercial flight.
You should think long-term with Joby and Archer
There's no way to know exactly when Joby and Archer will have their first commercial flights. However, it looks highly likely that they will take place in the UAE, sooner rather than later, perhaps even in 2026. Even if the date slips into 2027, that's hardly a terrible outcome. But investors need to understand that this will only represent the starting point for the next phase of each company's development. There's likely still a long way to go before either one is sustainably profitable, making them most appropriate for more aggressive investors.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
The UAE Just Inspected Archer's and Joby's Aircraft in Person. Here's Why Dubai, Not the FAA, Could Deliver the First Paying Passenger. was originally published by The Motley Fool
