More than 160,000 small, remotely-piloted passenger aircraft will be in service in congested cities around the world by 2050, says management consultancy Roland Berger. And, while the coronavirus outbreak may delay many electric vertical take-off and landing (eVTOL) developments over the next months and years, the firm expects it to have little long-term impact on the growth of the urban air mobility (UAM) market.
Speaking at the Global Urban Air Summit at FIA Connect on 23 July, Roland Berger’s UAM project leader Stephan Baur said nearly 70% of the world’s population will live in cities and towns by 2050 – up from 50% today – with population size expected to outstrip ground transportation capacity by over a third.
“However the airspace above large urban areas is still rather empty, and leaves some space for UAM operations,” he says.
Roland Berger expects the 160,000 eVTOLs to be spread equally across three defined market niches. The first group will be city taxis – on demand point-to-point flights from any available landing pad or vertiport within a defined area. The aircraft serving this market are designed to carry up to two passengers and their light luggage a distance of between 15km and 50km.
The next category will be airport shuttles – scheduled short-haul operations connecting landing pads with an aerodrome. These routes will be served by eVTOLS carrying up to four passengers and between 50kg (110lb) to 80kg of luggage.
The third is inter-city flights, which are described as scheduled services connecting two conurbations that are not served by a regular commercial service. Aircraft serving this niche will carry over four passengers on distances of up to 250km.
Timeframes for these aircraft to begin revenue flights varies by developer, says Manfred Hader, Roland Berger’s senior partner, aerospace and defence.
“We get two types of messages from the industry,” he says. Start-up companies that are focused on UAM, such as Germany’s Volocopter and Lilium, are typically “bullish” and have a clear ambition to have established commercial services by 2025 at the latest, he believes.
“Of course, their funding is also dependent on an aggressive timeline and a stream of good news on progress,” says Hader.
The legacy aerospace companies that are “active in the field of UAM”, such as Bell, Boeing and Embraer, take a more cautious approach, with entry into service of their programmes scheduled for the “late 2020s or even the early 2030s”, Hader adds. “Again this is understandable as these companies draw their experience from lengthy testing and certification processes,” he says.
Roland Berger expects to see a step-by-step introduction of UAM. “In the early years when volumes are small and costs high, it will be introduced as a high-price, exclusive service to say business executives,” says Hader. This premium price-tag will be offset by the convenience and time-saving of the service, “very much like today’s city helicopter service in highly congested cities”, he notes.
“As we go down the learning curve, and the scale of the operations increase, we will see the transition to a premium public transportation means, where UAM services will be comparable with taxi services in terms of cost,” says Hader.
However, before commercial operations can begin, the UAM developers have to overcome several barriers.
Top of the list is gaining full public acceptance: “Not only active approval, where people want to fly,” says Hader, “but passive acceptance, meaning people accept the visual and the noise pollution.”
To gain the trust, technology on these new platforms must be mature, safe, and properly certificated for airworthiness, he continues. “Today there are still many open questions, such as: What is the best design for each of three missions? Will battery technology evolve fast enough to deliver the required energy density? How will the aircraft integrate safely into the airspace? And by when will we have suitable certification procedures?”
As UAM is a completely new mobility system, much of its promised convenience will depend on how seamlessly it integrates with the existing transport network – air, rail and road. This will not only require a rethink of the “mobility chain and services”, says Hader, but will also require investment in additional infrastructure such as vertiports. “It also raises the question: What are the best location for these landing sites and what will they look like?” he adds.
UAM also needs a clear and convincing business case to show that it is commercially viable and can attract the necessary funding to scale up. “This challenge is particularly hard [to address] since we still have too many open questions to build a reliable business case, even if assumption-based,” concedes Hader.
He says a step-by-step approach will be needed to overcome these barriers. “Next the industry must show that eVTOLs actually fly, and what they are really capable of. This in turn will spur the public’s imagination and appetite for UAM services, which in turn will rally the support of authorities and investors.”
Roland Berger has identified over 100 active UAM aircraft programmes globally, more than half of which are based in Europe. No dominant business model or design has emerged from this line-up to date, it says, “and a shake-out of the market is to be expected”.
The coronavirus pandemic is having an impact on the market. Development and certification of many projects has slowed due to workplace and travel restrictions, while new start-ups are finding it more difficult to secure funding due to Covid-19 as investors plough their money into more advanced and proven platforms.
“Aerospace OEM’s might freeze or stretch budgets although we do not have any indication today that they will be a victim of budget squeezes,” says Hader.
On the other hand, demand for UAM could get a boost, he adds “as it represents an additional and very convenient means of private transportation and social distancing – a way to avoid crowded public transportation”.
Roland Berger says that between January and June more than $900 million was invested in start-up companies, “nine times as much as in all of 2019”. This, Hader says, “reflects a maturing of the players in the industry and is an expression of the continued trust of the investors”.
As the prospects for the industry matured from 2017 onwards, an increasing number of strategic investors entered the fray “especially from the automotive and digital industries”.
Now in the third phase, start-ups need to step-up their testing and certification efforts and start preparing for industrialisation, “all of which is high cash consuming”, says Hader. “As development schedules are on track, however, and new milestone, such as test flights have been successfully reached, investors are now increasing their funding,” he adds.
Roland Berger cites Lilium as an example. The Oberpfaffenhofen-based developer of the Lilium Jet received its first funding of $11 million in 2016 from venture capital firm Atomico. This initial cash injection allowed Lilium to set up operations and deliver the first demonstrator. A second round on funding followed in 2017 and the entry of strategic investors. The third round of funding was closed in April and June this year when Covid-19 had already struck. “Lilium received another $275 million and has meanwhile reached a valuation of $1 billion, becoming the first unicorn of its kind,” says Hader.
Roland Berger is confident the UAM market will take-off after 2030, and then grow rapidly. “We are very positive about this industry and expect more than 160,000 passenger drones to be flying by 2050,” says Hader.
