The aeronautical industry has been evolving rapidly in recent years, particularly regarding urban air mobility and the Advanced Air Mobility (AAM) ecosystem, in which new electric aircraft “eVTOLs” (acronym for electric Vertical Take-Off and Landing vehicles) play a leading role.
Still under development by several companies, eVTOLs are electric vehicles capable of vertical take-off and landing, proposed as an accessible alternative for urban air transport, for example, when compared, for example, to helicopters. However, as this technology advances, new challenges arise for its implementation, including issues relating to aeronautical regulation, the sharing of airspace with other aircraft, and the financability of eVTOLs.
In 2024, significant progress was made regarding the certification of these aircraft and the AAM ecosystem by major global regulators, such as the U.S. Federal Aviation Administration (FAA), the European Union Aviation Safety Agency (EASA), as well as Brazil’s National Civil Aviation Agency (ANAC) and the Department of Airspace Control (DECEA), which have been actively working on regulatory advances for the introduction of this new technology in Brazil.
Among ANAC’s actions, for example, are holding a sector consultation focused on the requirements for ANAC’s issuance of licenses and qualifications for eVTOLs, the publication of Notice No. 22/2024-ANAC, which aimed to select interested parties to present and implement solutions that contribute to the regulation of vertiports in an experimental regulatory environment, a regulatory sandbox, and the publication of the airworthiness criteria for the aircraft developed by the Brazilian company Eve Air Mobility. On the other hand, the most notable action by DECEA was the publication of the National UAM Operational Concept (PCA 351-7).
The challenge of fostering financing for the acquisition of eVTOLS
As eVTOL technology matures and regulations are developed, the aeronautical market begins to focus on another important aspect: how will the acquisition of these aircraft be financed in the future?
This question is fundamental, as the economic viability of eVTOL operations will depend not only on technological and regulatory development but also on the existence of appropriate financial mechanisms to enable their large-scale acquisition and operation.
The experience of the traditional aeronautical sector demonstrates that the availability of instruments such as leasing and financing was decisive for the expansion of the airplane and helicopter market, allowing operators and companies to access high-value equipment without the need to immobilize large amounts of their own capital. Thus, it is reasonable to assume that, as eVTOLs advance in maturity and obtain certifications, specific financial products for this segment will emerge, adapted to their operational and regulatory particularities.
Moreover, it will be essential for the legal framework to keep pace with this evolution, ensuring legal certainty for both operators and financiers, especially regarding the constitution of guarantees, registration of ownership, and enforcement of credit rights in the event of default.
Therefore, the consolidation of the eVTOL market in Brazil and worldwide will depend not only on technological and regulatory progress but also on the creation of a robust legal and financial environment capable of supporting the sustainable growth of this new mode of air mobility.
Given the high value of airplanes and helicopters, companies and financial institutions offer various products for the acquisition and operation of these aircraft. There are, for example, different leasing and financing lines, fostering a consolidated global market that moves billions of dollars annually. It is therefore expected that eVTOLs will become part, even if on a smaller scale, of this same market.
In a globalized market, however, it cannot be ignored that each jurisdiction has its own set of laws and regulations, including, for example, the rights of aircraft owners or holders of security interests over these vehicles.
As a result, different jurisdictions present different levels of risk regarding the protection of rights over aircraft. These risks are priced by owners and creditors and incorporated into financing and leasing rates, representing costs that are passed on to aircraft operators.
The Cape Town Convention
To mitigate such risk and bring greater harmonization of creditors’ rights over aircraft among various jurisdictions, the Cape Town Convention (Convention on International Interests in Mobile Equipment) and its Protocol on Matters Specific to Aircraft Equipment were signed in 2001. Both were promulgated and incorporated into the Brazilian legal system in 2013 by Decree 8,008/2013.
This convention, already widely adopted around the world and in major aeronautical markets, has a simple foundation: through the treaty, premises and rights are established to protect the interests of creditors, whether lessors of aircraft or those holding security interests over them.
These premises must be adopted by the relevant jurisdiction, which also undertakes to adjust its internal rules and laws, as necessary, to implement the convention’s provisions and procedures.
As the jurisdiction promotes such changes and grants more protection to the rights of aircraft creditors, the risk of doing business with operators in that jurisdiction decreases, resulting in more favorable leasing rates and financing conditions for operators.
Thus, the Cape Town Convention is a treaty of great relevance to the aircraft financing and leasing market. It promotes greater legal certainty for transactions and, consequently, fosters the development of economic activity in this sector.
The impasse surrounding the definition of eVTOLs under the convention
The Cape Town Convention, however, defines in its text the concept of airplanes and helicopters, establishing the requirements for its provisions to apply to each. It so happens that these requirements were conceived considering the reality of 2001, when the concept of eVTOLs was neither conceived nor foreseen in the industry.
Thus, today we face an impasse: although the convention has the potential to favor the development of the international eVTOL market and accelerate the dissemination and access to this technology, the concept of eVTOL is not covered by the Convention, at least not expressly.
A solution to this impasse would be to amend the current text of the Convention, more specifically the Protocol on Aircraft Equipment, or even to create a new Protocol specific to eVTOLs.
However, such a solution is far from simple: as an international treaty, amending its text or producing a new protocol depends on lengthy and complex international procedures, as well as the need for ratification and internalization of the changes by each signatory country.
Eventually, this may be the definitive solution to be adopted, but the time required for its implementation may not meet the increasingly pressing need for investments in eVTOLs and the already rapid development of this technology.
An intermediate solution: equating eVTOLs with helicopters
Perhaps there is an intermediate, elegant, and simple solution: the conceptual equivalence of eVTOLs to helicopters for the purposes of the convention’s applicability.
Technically, there is a clear distinction between what is proposed by eVTOLs and current helicopters. However, from a legal perspective, and for the benefit of the development of the aeronautical market and the advantages that eVTOLs will provide, it is understood that the convention’s criteria applicable to the concept of a "helicopter" could also be extended to eVTOLs, granting the new technology the same treatment given by the convention to helicopters.
From the wording of the protocol to the convention, helicopters "mean heavier-than-air machines (except those used in military, customs, or police services), whose lift in flight is provided principally by reactions of the air on one or more power-driven rotors on substantially vertical axes, and which are of a type certified by the competent aeronautical authority as capable of carrying (i) at least five (5) persons including crew; or (ii) goods weighing more than 450 kilograms, together with all modules or other accessories, parts, and equipment installed, incorporated, or attached, as well as all information, manuals, and records relating thereto."
Interpreting the wording attributed to helicopters, from a strict legal perspective, we understand that the requirements for the conceptualization of helicopters under the Cape Town Convention already include the concept of eVTOL—helicopters are also considered VTOL aircraft, which reinforces this argument.
From a certification and operational standpoint, there is no doubt that helicopters and eVTOLs have significant differences and will not be treated as the same type of aircraft by regulators.
However, for the purposes of the Cape Town Convention's financiability and applicability, we do not see any negative bias in equating these two types of aircraft, considering that this may be a temporary alternative until the convention provides specific provisions for eVTOLs. After all, the inclusion of eVTOLs under the convention would benefit the entire market, with no apparent harm to any stakeholder.
However, for the purposes of the Cape Town Convention's financiability and applicability, we do not see any negative bias in equating these two types of aircraft, considering that this may be a temporary alternative until the convention provides specific provisions for eVTOLs. After all, the inclusion of eVTOLs under the convention would benefit the entire market, with no apparent harm to any stakeholder.
However, not all eVTOLs would fall under the concept of the convention as proposed here – minimum passenger or cargo capacity requirements, as applicable to helicopters, must still be met. Based on the most relevant prototypes under development, the vast majority of eVTOLs are being designed for smaller capacities and may end up being excluded from the benefits of the convention. On the other hand, larger eVTOLs – which tend to have higher costs and may require a larger amount of credit for acquisition – could already fall under the convention according to the interpretation proposed here.
Given the possible exclusion of a significant portion of eVTOLs — smaller aircraft that are likely to be the focus of the industry in the coming years — we emphasize the importance of the challenge posed here to review the terms of the Cape Town Convention in order to conceptualize and bring specific provisions for these new aircraft in the future, which is closer than it seems.
Although the above proposition results from a logical interpretation and, based on a market perspective, favors the development of the aviation sector, it is still subject to questions and is far from being exhausted.
Even if it is adopted — which to us seems quite positive — it will certainly depend on concrete actions by the stakeholders involved to provide legal certainty to the interpretation that eVTOLs are, for the purposes of the convention, comparable to helicopters. Among these stakeholders are international bodies such as ICAO (International Civil Aviation Organization), UNIDROIT (International Institute for the Unification of Private Law), as well as eVTOL manufacturers, and the signatory jurisdictions of the convention.
There is no doubt that the debate on eVTOLs and the Cape Town Convention is still only beginning. However, the accelerated advancement in the development of this technology already requires a careful and critical look at the existing legal gaps, in order to improve our regulatory environment and allow for the safe — both technically and legally — implementation of eVTOLs.
Our team remains engaged and attentive to current and future discussions, committed to contributing so that eVTOLs cease to be a distant promise and soon become a reality.
