Archer Aviation and Southwest Airlines are teaming up to figure out what it would take to build a network of electric air taxis at California airports, with Southwest's customer data at the center of it all.
The two companies signed a memorandum of understanding on Friday, laying the groundwork for Archer to tap into Southwest's customer base and gain access to data about its customers to help inform decisions like where to build vertical takeoff and landing sites and local eVTOL stations.
This marks the second U.S. airline Archer has partnered with, after United Airlines, suggesting the eVTOL company is looking to support regional routes.
Southwest operates at 14 airports in California, and Archer's midnight aircraft is designed to replace a 60-90 minute drive to the city with just a 10-20 minute flight. One of the main use cases for the eVTOL network is ferrying passengers to airports, a trip that is often expensive and time consuming due to traffic congestion. Archer's main competitor, Joby Aviation, has a similar deal with Delta.
“We're looking at things like commercial integration,” Archer chief commercial officer Nikhil Goel told TechCrunch. “When you buy a Southwest ticket, you can add Archer when you book that ticket, either before or after the flight.”
Archer is also considering other ideas, including direct integration at airports served by Southwest and United.
“For example, imagine if you were flying into San Francisco International Airport, you landed right behind security at Terminal 2 and could board your Southwest Airlines flight directly without going through TSA screening,” Goel said, noting that Archer is in talks with the TSA to facilitate security checks at its vertical takeoff and landing field. “Other perks include the possibility of preferential or discounted fares if you're an A-list passenger. You could also earn Rapid Rewards points on your Archer flights and vice versa.”
The deal with Southwest comes as Archer has made two significant financing transactions in recent weeks, signaling it needs capital to get ready for commercial start in 2025. Archer decided last month to draw down the remaining $55 million available as part of a forward purchase agreement it signed with automaker Stellantis for 2023. As part of that deal, Stellantis agreed to help build Archer's manufacturing facility in Georgia, where Archer produces its Midnight aircraft.
Goel said Archer is currently building six conformal aircraft — prototypes built to the exact standards of the production model — at a small production facility in California. The company hopes to scale up production to about 650 planes per year at a facility to be built in Georgia, starting in the fourth quarter of 2024.
Archer also recently offered warrants to purchase up to 57,050 shares of its Class A common stock at $0.01 per share. The startup said in its prospectus that the warrants will be used to pay service providers an aggregate of $300,000, and that it will not receive any proceeds from the issuance. This suggests that Archer is using the warrants as a non-cash debt settlement vehicle to conserve cash while making payments to partners.
But Goel said cash preservation “isn't the real motivator.” Rather, he said, having tier one suppliers accept inventory as payment allows them to be financially aligned with Archer's success.
Either way, Archer needs money now if it wants to launch its eVTOL air taxi service as planned in 2025. The company has previously said it aims to launch in Miami and San Francisco next year in partnership with United Airlines and fixed-base operator Atlantic. Goel noted that Archer is also looking at Los Angeles and New York, and that its deal with Atlantic, as well as a recent agreement with private terminal operator Signature, gives it access to more than 200 bases across the US.
Besides the race to build enough Midnight aircraft to enter commercial service, Archer still needs to go through Federal Aviation Administration (FAA) certification. In June, Archer received its Part 135 Air Carrier and Operator Certificate, which means it can begin commercial operations with the aircraft in order to refine its systems and procedures before the Midnight's launch. Archer still needs to obtain type certification and production certification. The former proves that the eVTOL design meets all regulatory safety standards, while the latter ensures that Archer's production process can produce aircraft that conform to the approved design and are safe to operate.
Outside the U.S., Archer recently announced a deal with South Korean ride-hailing company Kakao Mobility to begin operating electric air taxis in South Korea in 2026. Archer also hopes to start operations in India and Abu Dhabi that same year.