Urban air mobility – A New Frontier in the Making?

With more than four billion people living in urban cities, a number expected to double by 2050, growing urbanization is straining the complex and somewhat obsolete mobility systems globally. Some of the cities, such as Sao Paulo, have become so congested that CXOs have to frequently use Helicopters to commute. With the existing road infra posing new challenges for city and transport planners, there has been a huge push to improve mobility in and around urban centers over the last decade. Worsening urban traffic has forced companies to explore alternative ways for people to travel around urban areas, while reducing congestion. Hence, the question arises, can disruptive technologies such as autonomous Air Taxis, Jet Ski, Jet Boards and Jet Bikes offer a viable solution?

Urban air mobility (UAM), the on-demand, automated passenger or cargo air transportation at lower altitude, is becoming a reality with global players unearthing various possibilities. These airborne vehicles, including air taxis (typically known as vertical take-off and landing (VTOL/ eVTOL)), helicopters and drones (including unmanned aerial vehicles) have been identified as next gen mobility solutions that can relieve urban road congestion. Although the idea of air taxis has been around for a while (studied by NASA and the aerospace industry in 2001), recent advances have renewed interest in the mode, as UAM promises faster commute, greater convenience, reduced pressure on an already stressed road infra, and improved access to remote areas.

Global players are pouring in huge investments

With the growing hype and buzz, aviation and automotive companies along with start-ups are actively participating in the UAM market. While a few are at the concept stage, others are piloting for commercialization. Aviation companies and auto giants alike are investing significantly in specialist start-ups or developing in-house teams to launch such products. For example, Delta invested $60m in Joby Aviation (which acquired Uber Elevate) and United Airlines invested $15m in Eve Air Mobility to purchase 200 air taxis, and $10m in Archer Aviation to buy 100 eVTOLs. American Airlines invested $25m in Vertical Aerospace and placed an order for 50 aircrafts. Airbus developed 4-seater City Airbus to target intracity travel.

With proven capabilities in electrification and manufacturing, multiple auto giants have gone the inorganic way, to create a robust product in collaboration with startups. For example, Toyota invested >$400m in Joby Aviation to collaboratively develop 5-seater eVTOL. It also applied for Japan air certification for commercial operation. Automakers Geely, Daimler invested in Volocopter for air taxis and Porche partnered with Boeing to develop a flying car. In contrast, some automakers have taken the in-house route to develop such products. For example, Hyundai allocated $1.4b for flying taxi development by 2025 and created a separate units focused on flying cars ‘Hyundai Urban Air Mobility division’. Also, Volkswagen’s China subsidiary introduced its eVTOL passenger drone Vertical Mobility (V.MO) prototype.

Although the US and Europe (expected to become a reality in Europe within 3-5 years) are leading the way in air mobility, developing economies like China and India are also exploring the space for transportation. Chinese firms are testing flying taxis in Dubai and are expecting to make it commercially available by 2024-25, while India aims to bring in this technology within the next 4-5 years to meet the growing air mobility demand.

What’s next

With growing advancement, more stakeholders, such as technology developers, urban mobility integrators, fleet O&M providers and aggregators are becoming a part of the UAM ecosystem. As the ecosystem matures, air taxis may be seamlessly integrated into the multimodal mobility system. However, the success UAM for public transit relies heavily on the regulatory frameworks across countries, infrastructure development, pricing power along with affordability and fleet reliability. Providers must address issues pertaining to establishing VTOL hubs, pricing systems, and winning public confidence of using UAM. Though UAM has the potential to address the challenges posed by land and water-based transportation, companies must be cognizant of the potential risks that entail due to inferior product quality, while governments and regulators must develop robust regulatory frameworks coupled with equally tough compliance requirements for UAM to become a viable transportation option.

Author: Himanshu Dutt

Associate Consultant, Strategy Consulting