Urban air mobility (UAM) could be a $1 trillion business with a societal impact bigger than NASA’s designs to put man back on the moon. That was the consensus of experts discussing UAM at the Association for Unmanned Vehicle Systems International (AUVSI) annual Xponential conference last month in Chicago.
“This will truly be a trillion-dollar-plus business opportunity,” said Michael Dyment, managing partner of Nexa Capital Partners, a firm that is researching the viability of select cities for UAM investment.
“What we’re doing here, what we’re going to create over the next five to ten years, could have significantly more impact on society, clearly in terms of economics, than going back to the moon,” said Davis Hackenberg, NASA’s project manager for advanced air mobility.
However, all this optimism was tempered by numerous conference speakers in and out of government who repeatedly emphasized the need to create a system that is at least as safe as current commercial air operations. Deputy inspector general at the U.S. Department of Transportation (DOT) Anthony Zakel noted that when his superior, inspector general Calvin Scovel, recently testified before Congress he warned that it is not a matter of if, but when, a UAS brings down a passenger plane. “Nothing changes public opinion more than plane crashes,” said Zakel. “The rules will be changed if a UAS ever brings down a plane. Especially in light of recent events with the 737 Max, from a legislative perspective there will be a default more to the safety position than there was before.”
Jonathan Hartman, disruptive technologies lead at Sikorsky, cautioned, “Aerospace is seen community-wide as a no-fail mission,” and that public trust in UAM is essential for its acceptance. “The level of safety you pick today will determine how successful we will be as a marketplace,” he said.
Apart from the safety considerations, Dyment said infrastructure investment to make UAM a reality is “needed everywhere” and will likely come mainly from the private sector, a market dynamic that could make landing fees of from $20 to $30 per flight necessary to repay investors. “We know clearly that the FAA is not going to foot any bill for UTM [unmanned traffic management] buildout for any cities in America,” he said, a view echoed later in the week by the DOT’s Zakel, who said, “Aircraft controllers are going to start managing UAS [unmanned aircraft systems] and when that happens someone on the Hill is going to say to UAS operators that they have to help defray the costs” of integrating UAS into the National Airspace System (NAS).
Investment Opportunities Abound
Dyment laid out six rules required to attract the amount of investment required to build viable UAM infrastructure, anywhere from $50 million to $2 billion per city. Those rules include defining the most viable metropolitan areas for service; defining the public benefit in a way that is accepted and understood, such as the potential for UAMs to enable better first responder performance; build a trustworthy coalition of partners; bring in institutional funds quickly; invest early in existing infrastructure such as airport FBOs—Dyment sees early popular UAM missions as transports from congested city centers to airports; and develop proper incentives for private infrastructure not currently available to the public. By way of example with regard to the last rule, Dyment noted that there are currently 400 little- or never-used private heliports in Tokyo that could be incorporated into UAM infrastructure for that city.
Both Dyment and Van Espahbodi, co-founder of the Starburst (business) Accelerator, believe there is sufficient private capital available to fund a viable UAM system in the United States and elsewhere, but the math needs to work. “The [UAM] infrastructure needs to be able to repay the bondholders for that investment,” Dyment cautioned, noting that the annual debt service per $100 million would run somewhere between $5 and $8 million. Espahbodi noted that already “a lot of uneducated money is going into this industry” and that the “economics of risk are being flipped on its head.” He pointed out that already 10 of the more than 100 companies in the UAM race are each worth more than $100 million, including those funded by billionaire “tech tycoons.” More money is flowing into the sector from Fortune 100 companies seeking venture partners.
Experts at Xponential seemed to agree that fully autonomous vehicles are the key to making any UAM system economically viable in the long term and that the technology simply is not ready for passenger travel—yet. “We are not proposing right now to put consumers in these machines and fly them around, although the FAA is not preventing us from doing that. We are preventing ourselves from doing that. These machines are not ready and need to be developed further,” said Brian Yutko, senior vice president for programs at Boeing unit Aurora Flight Sciences. “Certified aircraft will require robust systems design with failure-mode detection and analysis” and smart heuristics and artificial intelligence, he added.
While some first-generation UAM passenger vehicles such as the VTOLs proposed by Bell and Airbus are provisioned to be optionally piloted, in part to assuage the fears of regulators and the public about flying as passengers in aircraft without pilots, several speakers suggested this is unnecessary. NASA’s Hackenberg said he thinks public acceptance of autonomy “doesn’t seem to be a problem” based on survey data he had seen. “Putting a pilot in the vehicle will delay certification.” Speaking strictly for himself and not for NASA, he said, “I don’t think pilots are the way to start. The goal for this industry needs to be significant automation early on.”
Scott Drennan, Bell vice president of engineering innovation, echoed those sentiments. “I want it to be [full] autonomy right away and I think the technology is there to do that.” Drennan cited the need for 10,000 additional vehicle pilots just for UAM’s early stage deployment and how the addition of those pilots would inflate direct operating costs. However, Drennan and Nexa’s Dyment were skeptical that the public would accept flying pilotless—at first. “When the safety case is made, you will see boards of directors allowing their executives to get on these vehicles without a pilot, but it will be a while,” Dyment said.