A study released jointly by Deloitte and the Aerospace Industries Association (AIA) last month offered a new set of grandiose predictions for the future economic impact of the advanced air mobility (AAM) market. Totaling $115 billion by 2035 — equivalent to 30 percent of today’s U.S. commercial aerospace market and 0.5 percent of the country’s GDP — the report’s authors and respondents to its executive survey believe the sectors will be responsible for 280,000 high-paying jobs in 15 years.
The report also echoed a conclusion reached last year by a study produced by the National Academies of Sciences: a national strategy and whole-of-government approach is necessary to properly realize the potential of AAM and ensure American leadership in the sector.
I asked two of the report’s authors, Robin Lineberger and David Silver, to discuss the market potential, various barriers, and the policy steps they would like to see taken in the months and years ahead to enable advanced air mobility. Robin leads Deloitte’s Aerospace and Defense industry practice and David is AIA’s vice president for civil aviation.
Brian Garrett-Glaser: Just about a year ago, the National Academies released a report calling for a ‘National Blueprint’ on AAM, which is similar to the recommendation you made in the report released at the end of January, “Advanced Air Mobility: Can the United States afford to lose the race?”
Numerous government agencies are taking action to prepare for eVTOLs and this new industry, including the Federal Aviation Administration, NASA, and the U.S. Air Force, but we don’t yet see a whole-of-government approach. Why is that and where should it originate?
David Silver: If you look at the range of technologies that are involved in AAM and you look at the socioeconomic implications of success or failure — 280,000 jobs, 0.5 percent of the GDP, $115 billion a year — there’s a lot at stake. You add into that the broad range of agencies that have some piece, which goes beyond just the Air Force or NASA or the FAA or even the DOT; it’s also the Department of Commerce, the Department of Energy.
So if you look at all of that and ask where this all comes together, I think for us the obvious place is actually the White House. And if I had to pin it down to a specific job, I would say the chief technology officer (CTO) of the United States. That office, ultimately, has the potential to bring all these disparate elements together and help craft that strategy which will help us be successful.
Robin Lineberger: I would add that NASA, the FAA and the Air Force are actually coordinating very well — more so than I typically see, quite frankly. So while current lines of effort may not be comprehensive, as David talked about, there are numerous joint efforts such as the NASA and [U.S. Air Force] Agility Prime supply chain working group meeting this week. Many, if not all, of the meetings that we’re involved with, either as a provider of service or a presenter of information, we find NASA and the FAA are always joined at the hip.
Brian Garrett-Glaser: With a new administration in office eager to pour money into infrastructure improvement programs and combat climate change, this year appears to be quite significant in terms of potential government support for the development of the AAM ecosystem. Aviation is often an afterthought in this type of legislation and most of the communication we’re hearing so far out of the new administration is certainly more focused on terrestrial transportation. What should be the industry’s priorities with respect to advocacy, Congress, and government support?
David Silver: You’re absolutely correct, Brian; when we get to infrastructure bills aviation is a tertiary thought at best. So, the opportunity this year as they work on an infrastructure bill is to get Congress thinking about what it will take in terms of infrastructure — not just in terms of battery charging and the electrical grid but also in terms of vertiport placement or design. All of these things need to come together.
So, we can use this upcoming bill as really a place to set the framework for the future. And it doesn’t necessarily mean that we need to start spending the money on infrastructure, but at least we need to start spending the money on understanding the infrastructure that is required. And if we do that in a thoughtful manner, we’re going to be setting ourselves up for success for the next bills that come down the line. We are definitely going to focus our efforts on working with Congress and the administration to start thinking about aviation and specifically AAM as a future critical piece of the infrastructure.
Robin Lineberger: Couldn’t agree more. I think if we step back and look at three or four key components, David has hit on two of them: electric grid and vertiports, where to place them. We think, though, to the degree that we view the current air traffic management system as part of our transportation infrastructure, we need to augment or add to that to build out the infrastructure to manage and control the aircraft — an airborne piece of our infrastructure.
And then the communications networks. Will those that get chosen [to support AAM] ultimately be driven out through commercial demand for 5G-like services, or do we need to do something specific to support AAM in higher density environments. To David’s points, studies and understanding what needs to be done are key; we don’t necessarily need to go pour concrete right now, but we need to sort of frame it up and add those two dimensions as well.
Brian Garrett-Glaser: Stepping back for a moment, let’s talk about what is driving the AAM movement. Is electrification the key technology driver that will enable the creation of this massive new market for vertical lift?
Robin Lineberger: Electrification is a key driver, but not the only driver. There’s a convergence of technologies — demonstrable, usable technologies — that are enabling this market. One is certainly electrification, and as a result of electrification you can go to distributed power which allows you to scale up and down in a way that’s new. Those two are kind of one and the same.
The second driver is the advanced software that allows the vehicle to control itself to deal with that distributed power. And that becomes advanced technologies throughout the lifecycle, including the autonomy and cognitive abilities once the aircraft go into flight. So, the broad concept of an automated flight deck or an automated aircraft following that maturity curve in a way that parallels in some ways what we’re seeing in the automotive industry.
Next we have advanced materials providing a combination of strength and weight reduction, and advanced sensors — optics, radar, LIDAR — working with AI to do object recognition. Then we have high speed secure communications to start moving data around, communicating peer-to-peer as well as through the network in order for the aircraft to be managed in the airspace.
If you were to take any one of those out, you would have a hard time achieving where we’re going. But I would agree with your premise that electrification is a key component but certainly not the only one.
Brian Garrett-Glaser: But more specifically thinking about the creation of this new market, it’s reliant on a step change in cost, right? And much of that is attributable to electrification?
Robin Lineberger: The cost curve gets bent when you do two things that are circular. One is that through electrification and fly-by-wire control mechanisms, you vastly reduce the number of moving parts similar to with electric cars, and the maintenance needs go way down as well. When you can reduce both the preventive and response maintenance cycles, those vehicles get utilized more often, and through the defragmentation or higher utilization, the per-unit cost of flight gets amortized over a lot more flight hours and hence the cost to the passenger goes down which helps increase accessibility.
And when you add the autonomy aspect as step two — when you can reduce the human intervention in the flight of the vehicle — you take another major labor cost component out, again driving that down. In today’s world, if you’re thinking as you do with helicopters, flying takes a highly certified individual. So it’s not only labor costs, but the limits at which the labor can fly, fatigue and all of that, you start getting significant cost benefits.
David Silver: Advanced manufacturing techniques are also an element here. The bottom line is that we’re talking about a green-field environment here and the ability to utilize new manufacturing techniques that are certified by the FAA, who is ultimately the arbitrator and authority in this, is going to also help drive down those costs and allow you to scale eventually to an automotive-type environment for build.
Robin Lineberger: Agree. And of course scale will drive down the initial acquisition cost of a unit, combined with the maintenance and the autonomy.
Brian Garrett-Glaser: There are numerous advantages and disadvantages to the strong culture of general aviation that exists in the U.S., but as both drones and AAM begin to scale and perhaps require certain equipage to reach the densities that are envisioned, how do you foresee navigating that potential collision course between this new wave of aircraft and legacy manned aviation?
David Silver: Let me start off by saying that there is no doubt we see safety as job number one, and we within aviation have a culture of safety that has proven to be successful and we will continue to focus on and improve that culture.
In terms of the integration of these aircraft into the airspace, initially operations will be limited enough that we have all the rules in place to do that safely, remembering that they will probably be piloted and on a very specific route. So we foresee no problems in the near term.
Secondly, we need to protect the equities of the current users. AIA in no way is saying, listen, everybody needs to get out of the way; a lot of our members actually build those aircraft, and we cooperate extensively with the airlines and the general aviation community as well.
But there is a crossover point where you could see eventually these aircraft operating in an equal manner. That is a little ways off, but it’s no different than [the FAA project to modernize air traffic control] NextGen in that with we’ve had equipage and it got to a point with ADS-B and other technology where pilots were eventually told unless you’re equipped for NextGen, you’re further down in the queue. So as these aircraft evolve and become more common and we cross over to more principles of autonomy, I can see a crossover point. When, I don’t know, but it will occur, and I think there’s a way to manage it in a harmonized approach, much like we have done with NextGen. There is no on/off switch; it’s a gradual curve that we will eventually reach.
Brian Garrett-Glaser: Let me end on a provocative note. I think the timeline you included in the report, which for example expects operations in a few cities with limited automation to be almost a decade away, was very realistic, but the recent history of the drone and unmanned traffic management markets demonstrates that sometimes there is a wave of interest and investment in something that just isn’t ready for prime-time.
Is it possible that the wave of investment in AAM and eVTOL aircraft is too early, and investment and support for building out this ecosystem could taper off before the capabilities and the market are proven?
Robin Lineberger: As a good consultant, I’m going to defer and say it depends. The market and the offerings are very broad, so you have the original equipment manufacturers doing design, but then you have an entire supply chain for the vehicle, and you have a federated market for air traffic management and comms. It’s really hard to say that investment is too early or too late on the broad because there’s a right time to invest depending upon where you are in that ecosystem.
One might say that, on the whole, investors are pretty good at targeting when and where to spend their money, but I couldn’t make a broad market statement because of the diversity of the marketplace and product offerings.
Typically, everyone wants to talk about the vehicles, and over the years the timeline it takes to design, develop, and deploy aircraft has become pretty well understood. And it takes capital along that life cycle and this market is not particularly different.
David Silver: From a policy standpoint, I would answer this by pointing to the name of the report. Can the U.S. afford to lose this race? I think market forces will ultimately — like in the case of the very light business jet — determine whether this is viable today or in the near future. But our job is to make sure that the policies are in place so that the companies are enabled. Because if this is real, which I happen to believe it is, it’s a huge opportunity to bring jobs, infrastructure, new technology, and access to the citizens of the United States.
And that, to me, says we need a national strategy to ensure success and then allow market forces to determine whether we are successful. But without having that strategy, I guarantee you we won’t be.