UAM Sector Set For Tighter Finances and Consolidation

 - June 25, 2020, 10:09 AM

The Urban Air Mobility (UAM) sector has reached an inflection point that could see consolidation among the more than 200 companies vying to bring new aircraft to market, according to Sameer Savani, head of innovation and engineering with UK industry association Aerospace, Defence, Security & Space (ADS). Addressing a June 25 conference organized by the Institution of Engineering and Technology, he said that while Covid-19 has not changed many of the drivers and challenges for this fast-growing aviation sector, it might result in financing constraints that could affect the viability of some would-be market entrants.

“Covid has not changed the UAM sector fundamentally," he commented. "And in fact, some of the demand might increase as the new aircraft are well suited to social distancing. But we don’t yet know what will happen to financing on the supply side. Investment has been leveling off and we will now see some consolidation.”

In Savani’s view, eVTOL aircraft startups that were able to secure funding, including from the venture-capital sector, before the pandemic could be far better placed to get aircraft into production than numerous companies that still need more investment. At the same time, he said established aerospace groups are having to cut back on research and development spending to protect revenue streams that have been badly depleted by Covid.

According to Savani, many of the new eVTOL aircraft programs have not adequately defined the use cases for the vehicles. He argued that companies need to focus on building a complete ecosystem to support UAM operations. He said many of the startups instinctively intended to follow a “go it alone” business model in which they would seek to design, manufacture, and operate aircraft. In his view, a collaborative approach involving wider expertise and deeper aviation experience will make them more likely to succeed, and he pointed to recent new engagements in the sector by leading automotive and aerospace groups as positive moves in this regard.

Part of the inflection point that Savani and his colleagues at ADS see happening involves a reckoning between the bold promises made for UAM and the constraints that are becoming more evident to the sector’s pioneers. He pointed to examples of the latter, such as limited landing sites, possible restrictions on the numbers of aircraft allowed to operate within each city, and poorly defined business models for commercializing air taxi services.

In 2018, ADS established a UAM working group that now involves more than 70 companies meeting each month to implement a shared UAM Vision 2025 plan. The association is closely involved in helping companies to take advantage of UK government support for the sector through initiatives such as the Industry Strategy Challenge Fund and the FutureFlight Challenge.

Savani stressed that there is much more to the sector than just the picture of small eVTOLs flying around cities, as the term UAM implies. “Yes, it will involve intra-city flights, but also inter-city services and sub-regional flights involving greater distances,” he commented, predicting that regions including South America, the U.S., the Middle East, and China that don’t currently have extensive public ground transportation will likely be early UAM adopters.

On July 23, the UK’s Farnborough International Airshow, in which ADS is a partner, will hold its second Global Urban Air Summit as part of the FIA Connect online event, which is scheduled for the week when the now-canceled airshow was to have been held.

This story comes from the new FutureFlight.aero resource developed by AIN to provide objective, independent coverage, and analysis of new aviation technology, including electric aircraft developments.