Mobility is considered the lifeblood of cities and the pillar for moving people and goods around. Aviation can be seen as an exemplary case of mobility that is currently facing major challenges. “Mobility of the Third Dimension“ referring to opportunities in the air, also known as Advanced Air Mobility or AAM for short, represents a new-to-market approach to rethink aviation in an innovative and sustainable way. The following article demonstrates the current state of development as well as opportunities and challenges of this upcoming branch.
Concepts and Business Models
The concepts of AAM transport solutions are diverse. They are mostly wingless aircraft concepts that use at least four fixed propellers. Usually the number of passengers varies from one to eight, depending on the model. Currently, AAM has established itself as an innovative and rapidly expanding industry, tapping into an investment market of USD 5.8 billion in 2021, representing a milestone in AAM history. Various stakeholders in the transportation industry are investing, most notably prominent aviation players such as aircraft manufacturers, airports and airlines.
AAM is of particular interest to aircraft operators and municipalities, as AAM will permanently change the world of travel and grow significantly throughout the transportation sector. Current forecasts predict that AAM will establish itself as an end-customer capable service by 2035. Its availability (under a commercial operation scheme) in cities and metropolitan areas is predicted by 2050, representing 160,000 unmanned commercial passenger drones in use worldwide and generating an annual revenue of around USD 90 billion. In addition to contributing to growth in the military and government transportation sectors, AAM will gain a foothold primarily in passenger transportation. Projections suggest that the majority of AAM revenues will be attributed to shuttle services to and from airports and intercity flights. In order to benefit from these revenues as an airline, it is indispensable to efficiently and seamlessly integrate AAM into existing customer journeys as a new intermodal transport mode for passenger journeys. Exemplarily use cases of AAM both existing and conceivable are the substitution of cabs, helicopters or in the area of freight, respectively logistics.
Scenarios of Integration – Opportunities and Challenges
Lufthansa Consulting is evaluating possible integration scenarios for AAM in existing traffic modes. The main challenges are found in the areas of operations and infrastructure, flight safety, the technological acceptance of this innovation and the integration of AAM into the customer journey.
One big challenge in establishing AAM in the market is its integration into airspace infrastructure. According to the published goals of the AMM manufacturers, the first hurdle is the initialcertification of drones, which will probably be overcome in the second half of the 2020s. But even after certification, it is important to integrate the drones into the infrastructure and operational processes of air traffic. Main characteristics of AAM aircraft include vertical takeoffs and landings, either manned or unmanned. Flights can be piloted in a partially automated or fully automated way. The technological innovation in the AAM is the development of electric propulsion and battery technologies. The close integration of digital technologies and electromechanical elements is therefore a key feature of AAM. Even in Europe alone, 43 cities and regions are working on ideas and concepts to sustainably embed this innovative mobility approach into the aviation market. Initial drone pilot projects have taken place in cities such as Dubai, Singapore, Tokyo and Hamburg. These projects included scattered pilot presentations, prototype vertiports, and public testing. Drones move in lower airspace and today the airspace over our cities is open - it is neither structured nor regulated for drone operation. It is therefore first necessary to create the infrastructure for AAM flights including takeoffs and landings in these areas, and to develop cargo and passenger transportation for innovative aircraft-types. In addition to the structured airspace, the infrastructure of cities and airports will need to be rebuilt. Similar to the organization of an airport, the operation of AAM drones requires dedicated terminal buildings, landing and takeoff runways, security checkpoints, and recharging as well as maintenance facilities.
As a new additional and beneficial intermodal transport mode, AAM needs to be integrated into an existing complex transport system of passenger and freight traffic. Even today people demand seamless and time-saving transitions between single or multiple modes of transportation. Travel chains and routes must be closely coordinated with other modes of transport and allow for some degree of flexibility. To enable seamless and smooth integration for passengers, existing challenges such as transfer times or baggage transport must be identified, adapted, and resolved. Aviation companies’ ambitions are to adapt existing customer journeys to integrate AAM. Therefore, it is essential to develop a high-quality service concept along the entire travel chain - starting with the booking process, through to arrival and time spent at airports, on-board experience, transfer between modes of transport, and sales and after-sales processes. Customer experience is the key for differentiating AAM from other intermodal carriers. The prerequisite for the development along all the aforementioned train-chain steps is technological acceptance. It is essential that flight safety of AAM vehicles is guaranteed, as the crucial factor is a key requirement for customer trust regarding the unmanned, automated characteristics of this innovation.
Even if challenges need to be identified for the embedding of drones in the urban landscape, the advantages of AAM in comparison to current modes of transportation are unique and completely new for our time. Among the advantages of AAM, the hybrid-electric to all-electric propulsion system should be mentioned as it unites the indispensable aspect of sustainability in this innovation. Beside CO2 reduction, the reduction of noise improves quality of life and health. However, AAM is not only a green innovation, but also brings unprecedented advantages such as time and cost efficiency as well as urban space saving. Research has shown that the price of AAM vehicles is comparable with the price of standard taxis. Due to the direct, optimized routing in the air space, AAM mobility can generate efficiency gains up 20% compared to cars on the streets, while reducing the CO2 emission to zero.
The establishment of suitable infrastructure and the development of regulations are seen as challenges of AAM that will need to be to overcome. The advantages of AAM must be utilized and smoothly integrated into the existing travel chains and environments of today's transportation systems. The AAM industry is evolving at a rapid pace with first tests demonstrating that the use of AAM aircraft can be successful, and will probably reach the market in a few years’ time. Companies operating in the aviation sector should take a detailed look at the options today and recognize possible opportunities. The decision must be made now to what extent an entry and investment in the AAM market makes sense, so that future integration and adaption can occur within today’s existing systems and processes.
Authors: Wolfgang Bublitz, Associate Partner, and Sina Bonath, Associate Consultant, Lufthansa Consulting