The Rise and Commercial Potential of Transborder eVTOL Operations
Until now, the use of eVTOL has been discussed within the context of AAM and Urban Air Mobility (UAM), focusing mainly on inter- and intracity air taxis and regional connectivity. The assumption hitherto has been that eVTOL operations would be deployed domestically.
However, the growing demand for price-competitive and point-to-point regional air services, compounded by the imperatives associated with the global net-zero carbon agenda, may justify a business case for the operation of eVTOL flights across the U.S.-Canada border. With 90 percent of the Canadian population living within 150 miles of the U.S. border, the so-called transborder market includes densely populated city pairs under 200 miles apart that could be operated by eVTOL: Windsor-Cleveland (170 miles), Vancouver-Seattle (142 miles), Victoria-Seattle (105 miles), Toronto-Buffalo (100 miles), and Windsor-Detroit (3 miles), to name a few.
From a purely commercial perspective, airlines associated with the purchasing of eVTOL aircraft seem to agree that scheduled eVTOL flights are preferable to non-scheduled eVTOL flights. Azul and Lilium have reached an agreement to offer scheduled eVTOL services in major cities such as São Paulo and Rio de Janeiro. In the U.S.-Canada context, airlines could extend the reach of their network by multiplying behind and beyond points, thus providing additional air connectivity to smaller regional airports. Virgin Atlantic recently explained that the option to purchase up to 150 four-seat eVTOL aircraft from Vertical Aerospace was based on a vision to “provide regional connectivity across the first and last 100 miles of the journey.”
Despite the many opportunities that transborder eVTOL services present, significant legal and regulatory challenges exist, and these must be thoughtfully overcome to ensure smooth integration into the existing transborder airspace.
Legal Framework for International eVTOL Services
One key issue is whether scheduled international air services should be based on a set of global standards through the International Civil Aviation Organization (ICAO) or be regulated according to a more tailored framework to which the parties agree on a bilateral basis.
Chicago Convention
The Convention on International Civil Aviation (Chicago Convention) provides the principles that allow international civil aviation to develop in a safe and orderly manner and international air transport services between countries to be established based on reciprocity. Unlike non-scheduled international air services (i.e., charters), which are generally authorized based on national regulation, the provision of scheduled international air services is regulated by way of bilateral air transport agreements or treaties.
The ICAO and the Integration of eVTOL Operations Between the United States and Canada
The ICAO “is funded and directed by 193 national governments to support their diplomacy and cooperation in air transport as signatory states to the Chicago Convention (1944).” As defined by the ICAO, scheduled international air services should pass through the airspace over the territory of more than one ICAO Member State; and they should be performed by aircraft transporting passengers, mail, or cargo for remuneration. The ICAO also stipulates that scheduled international air services should be open to the public and serve traffic between two or more points, either according to a published timetable or “with flights so regular or frequent that they constitute a recognizable systematic series of flights.”
Air services operated by eVTOL aircraft between the territories of Canada and the United States can be considered scheduled international air services if they fulfill these requirements, which are also compatible with the definitions provided by and annexes in the U.S.-Canada Air Transport Agreement (U.S.-Canada ATA). Notably, eVTOL operators have the option to either publish a timetable in advance or simply schedule departures regularly or frequently (i.e., every hour).
Designation of eVTOL Operators and Traffic Rights
To effectively exercise the traffic rights and operational flexibility provisions provided in the U.S.-Canada ATA, eVTOL operators would need to become designated airlines. From a commercial perspective, the possibility to designate eVTOL operators as “airlines” under bilateral air services agreements would likely turn them into valuable providers of international flights, reliable partners for network carriers seeking to maximize their market share, and key enablers of regional connectivity.
Designation of eVTOL Operators
In Canada, the strategic decision of an eVTOL operator to become an airline for the purposes of providing international air services is subject to a national licensing process that requires, among other conditions, compliance with ownership and control requirements and liability insurance obligations. At the outset, access to foreign financing, aircraft, and experienced leadership may be limited for Canadian eVTOL operators in the early stages of development due to foreign ownership and control requirements. However, a recent decision issued by the Canadian Transportation Agency with regard to Flair Airlines suggests that some level of flexibility could be possible for new entrants.
Similarly, in the United States, eVTOL operators intending to engage in foreign air transportation of passengers and cargo will need both economic and safety authority from the U.S. regulators. U.S.-certificated eVTOL operators must decide their intended corporate structure and types of operations, comply with stringent ownership and control rules, secure required Department of Transportation and Federal Aviation Administration (FAA) operating authorizations, and meet liability insurance obligations. The FAA has been working closely with new entrants in this space and very recently granted Joby Aviation its Part 135 Air Carrier Certificate, allowing it to begin on-demand commercial air taxi operations in advance of its type and production certificates for its eVTOL aircraft.
Designation of Traffic Rights
The U.S.-Canada ATA would allow eVTOL operators that have been designated as airlines to operate transborder scheduled services between any point or points in Canada and any point or points in the United States, including points in third countries using fifth freedom rights. Quite relevant for future eVTOL operators, a designated airline would be allowed to carry its own stopover passenger traffic between points in the territory of the other party and transfer traffic from any of its aircraft to any of its other aircraft at any point on the routes. The entry of eVTOL operations in the U.S.-Canada transborder market may be further strengthened by the operational flexibility provisions in the U.S.-Canada ATA, most of which are currently underutilized.
The next question is whether a small airport or vertiport—or any airport—can qualify as a “point” for the purposes of scheduled international air services under the U.S.-Canada ATA. Considering that both countries have expressed in unequivocal terms their commitment to a “full open skies agreement that maximizes competition among airlines in the marketplace, including operations behind and beyond the territory of the Parties, with minimum government interference and regulations,” we see no reason to conclude that the scope of the term point, as used in the U.S.-Canada ATA and which refers to the route rights exchanged by both countries, would be limited solely to international airports. Consequently, for the purposes of U.S.-Canada transborder eVTOL operations, the term point can be interpreted as any airport or vertiport, without the need to be designated as international or to be in compliance with any other capacity conditions (for example, a minimum number of passengers per year).
Facilitation and eVTOL Operations: The Value of Preclearance
Nevertheless, there are practical limitations to the use of “any points” for the purposes of building transborder routes for eVTOL operations between Canada and the United States. The most obvious obstacle is the need to build adequate facilities to process both inbound and outbound passengers.
Considering that flexibility and convenience are necessary for successful eVTOL operations, a potential solution would be to use the provisions of the current Agreement on Land, Rail, Marine, and Air Transport Preclearance Between the Government of Canada and the Government of the United States of America (LRMA Agreement), which allows U.S./Canada–bound travelers to clear customs and immigration formalities upon departure, thus eliminating the need for inspections and security screenings upon arrival.
To minimize the costs related to having U.S. officers stationed in Canada or Canadian officers stationed in the United States, both countries could agree to use automated verification methods such as eGates, self-service kiosks, and other facial recognition systems. These methods are easily scalable and can be used for a wide range of functions beyond inspection, including a passenger’s eligibility to travel across the U.S.-Canada border due to immigration status or health-related entry requirements.
The broader and reciprocal implementation of the LRMA Agreement would add convenience and efficiency to the passenger journey, especially if eVTOL operations are to be positioned as regional connectors for the first and last few miles of the travel journey.
Aviation Safety and Security Challenges
One argument for integrating eVTOL operations under the framework of bilateral air services agreements is based on the overall expediency in issuing operating authorizations and technical permissions for new air services, as well as mutual recognition of certificates of airworthiness, certificates of competency, and other licenses issued by the other party, where such other party complies with the applicable ICAO minimum standards. At this point in time, however, the ICAO is not in a position to establish minimum standards or recommended practices for eVTOL operations that designated airlines could use to comply with the mutual recognition provisions in the U.S.-Canada ATA. Together with aviation security provisions, this is perhaps the biggest obstacle to the deployment and commercial success of transborder eVTOL operations in the foreseeable future.
For now, the alternative option for eVTOL operations is to rely on and adapt to national regullatory schemes that cover some of the key areas covered in bilateral air transport agreements, such as operating licenses, compliance with local laws, safety, security, and some basic economic rights. The downside of this approach is that operational flexibility for eVTOL operations may be limited and the ability of designated airlines to schedule regular transborder eVTOL routes may be precluded. This is certainly a commercial disincentive for airlines to integrate eVTOL operations into their networks or to enter into long-term commercial arrangements such as codeshare and interline agreements. From a commercial perspective, non-scheduled eVTOL charters are an inferior product for both business and leisure travelers connecting to another point across the border, unless provided as an ancillary or premium option based on the on-demand model.
Given the navigational characteristics of eVTOL operations (i.e., low-altitude flying, highly automated flight controls), aviation security will require a high degree of involvement by future operators and coordination with relevant national and local authorities for compliance. International aviation security conventions generally impose on Member States the obligation to provide all necessary assistance to prevent seizure of civil aircraft and other unlawful acts against the safety of aircraft, passengers, crew, airports, and air navigation facilities. Any such incident would have serious reputational impact, likely prompting local authorities to impose much more stringent requirements.
Existing aviation security obligations may be more onerous for uncrewed eVTOL operations compared to traditional aircraft as the former are more vulnerable to unlawful acts, notably cybersecurity attacks due to high levels of flight-control automation and navigation systems. Airports and vertiports also would need to be equipped with the necessary infrastructure to control access and minimize potential threats. The ICAO would need to introduce special security provisions adapted to the eVTOL environment in its standards and recommended practices as set forth in relevant annexes to the Chicago Convention, particularly Annexes 6, 8, and 9. Additionally, operators would have to develop security programs to prevent, contain, and address risks related to international air operations.
Like the mutual recognition of certificates under aviation safety, ensuring the security of cross-border eVTOL operations is one of the greatest challenges, potentially slowing down future adoption by travellers.
Infrastructure and Market Regulation
The infrastructure required for scalable transborder eVTOL operations will likely include multiple landing/takeoff pads; charging stations; and adapted terminals with security checkpoints, restricted control areas, real-time surveillance, and suitable boarding spaces.
Investments made by global infrastructure operators to develop vertiports in strategic locations, as well as exclusive cooperation agreements between airlines and eVTOL manufacturers, may create unintended barriers to new entrants in coveted markets or city-pairs, potentially triggering allegations of exclusive access, discriminatory prices and practices, and abuse of dominant market position. User charges may be another issue of contention for eVTOL operators as costs related to vertiport access could be set at a premium or otherwise unreasonable level. The Competition Bureau of Canada has brought litigation against airport authorities, alleging an abuse of a dominant position in connection with airside access.
While not in the immediate-term, market concentration in some high-demand city-pairs could also be an issue, depending on the structure of cooperation agreements between airlines, manufacturers, and infrastructure providers. Considering that the deployment of eVTOL technologies is compatible with climate change action and net-zero carbon emissions goals, it is not unrealistic to expect governments to directly or indirectly subsidize eVTOL infrastructure and operations; such government involvement may jeopardize the mutual commitment under the U.S.-Canada ATA for each party to ensure “fair and equal opportunity for the designated airlines to compete in providing international air transportation.”
Conclusion and Call to Action
While the multilateral Chicago Convention regime has provided the framework to support the development of international commercial civil aviation in the past 70 years, the launch of cross-border eVTOL operations presents unique legal issues and regulatory challenges. The current provisions in bilateral air services agreements can provide an appropriate framework for cross-border eVTOL operations without the need to renegotiate a separate bilateral regulatory framework, which would take years to build and implement and which could delay the commercialization of AAM solutions such as eVTOL flights across the U.S.-Canada border.
While both governments continue to work on the safety and air navigational aspects of eVTOL operations and other AAM solutions, there is a need to identify the policy and economic regulation challenges that the nascent AAM industry is likely to face during the commercialization phase. In a cross-border context, the harmonization of safety rules, standards, and requirements is a first step in the right direction, but this cannot be achieved—let alone progressed—without having a bilateral cooperative framework where both governments and regulatory agencies can share best practices, findings, and know-how.
Broader stakeholder engagement with the AAM industry—as well as with existing airlines and airports; aircraft manufacturers; vertiport infrastructure operators, designers, and builders; investors; and local communities—will be necessary to identify the opportunities and challenges ahead for the commercialization of cross-border eVTOL operations, including an understanding of potential business models, options for airline network integration, market concentration risks, accessibility (for users and operators), and consumer protection aspects. The outcome of these broad engagements—which could range from consultations to the formation of working groups with specific deliverables—could inform national regulatory authorities and the ICAO on the smartest approaches to regulate a nascent industry. Furthermore, the industry’s direct engagement with the ICAO also may be necessary to inform any needed modifications to the ICAO Template Air Services Agreement, which may serve as a basis to amend existing bilateral treaties to support full-scale commercial eVTOL operations.
Over the longer term, governments likely will continue to walk a fine line between exploring the potential of eVTOL developments to provide safe and reliable AAM solutions to different segments of travelers and ensuring a level playing field for new eVTOL operators and investors.
