Millions of commuters in the region's cities have to contend with chronic gridlock every day, sparking a race to develop new ways to avoid the snarl-ups.
While the developed city-state of Singapore does not suffer major congestion, it is seen as a perfect test-bed for new technologies due to its compact size and openness to innovation.
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German firm Volocopter said Tuesday it will conduct the test flights in Singapore in the second half of next year with the support of the government.
Resembling a helicopter, Volocopter's electric air taxis take off and land vertically. They are based on drone technology and can fly two people for around 30 kilometres (19 miles), the firm said in a statement.
The Singapore tests follow a public demonstration in Dubai last year.
"The Volocopter is designed specifically for inner-city missions," Volocopter said in a statement, adding it can withstand minor turbulence around skyscrapers, allowing for smooth rides.
"It is so quiet that at a flight height of 100 metres (330 feet), it cannot be heard over the typical background noise of a city."
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A company spokeswoman said the Volocopter can be controlled by a pilot using a joystick, or remotely from the ground.
Apart from the test flights, Volocopter will also set up a product design and engineering centre in Singapore to support its expansion plans.
Volocopter said they are getting ready to roll out their first fixed routes in cities.
The hover-taxis will complement helicopter-hailing services which are already taking off in some cities to beat traffic jams.
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