ABU Dhabi is set to invest hundreds of millions of US dollars for the rollout of air-taxi services in the emirate, ahead of Archer Aviation’s plan to begin operations in the city as soon as next year.

The Abu Dhabi Investment Office, or Adio, reached an outline agreement with the California startup to “accelerate Archer’s planned commercial air taxi operations” in the United Arab Emirates, according to a statement on Thursday (Apr 25).

The deal covers a plan to develop local manufacturing of Archer’s Midnight air-taxi, as well as operations and training across the region, the company said, following a memorandum of understanding signed in October.

The incentive package includes capital contributions towards manufacturing, as well as financial subsidies tied to production, operation and other related activities, Archer said in an email.

Adio is collaborating with Archer to support vertiport construction and other facets of air-taxi operations in the UAE. The manufacturer has partnership agreements with local operators Falcon Aviation and Air Chateau, as well as maintenance and repair with state-owned GAL-AMMROC.

Archer has chosen Abu Dhabi for its international headquarters, and has already announced one route between Abu Dhabi and Dubai’s man-made island of Palm Jumeirah. That timeline puts the firm in direct competition with Joby Aviation in the race to launch a commuter service in the region.

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Neither of the US firms has received Federal Aviation Administration approvals to start services. BLOOMBERG