Introduction to the article UAM Addressable Market & Financial Needs of prof. J.C. Halpin by Alessandro Amendola
Understanding the evolution of light air transport in the context of large metropolises, or in the connections between cities, albeit on short stretches has a great importance from the social point of view and business. However it is a very difficult exercise !
It is quite evident that today we are witnessing a real competition that includes dozens of companies, some newly formed, start-ups, and even large industrial groups. This race is fueled by the availability of new emerging technologies that promises to deliver products with performance never seen before and by considerable financial resources, coming from investors who bet on the future of these technologies and the AAM.
The question is: how many projects will actually arrive at a complete production and operational phase?
A better understanding of the history of past programs so that might only selectively repeat that history in the future. The behavior of large system development and management involving technology enhancements also experience similar challenges amenable to analysis as are most of the physical and software systems themselves. A retrospective analysis based on the similarity between light utility aircraft and AAM vehicles is certainly interesting and useful. Hystorically the total number of light utility aircraft (LUA) that have been produced in the last 60 years is about 11000 units, with an average total cost of certification and full-rate production (FRP) in the range of $1-$1,5 billion. More in details almost 20 months are required in average from the 1st -Flight to EIS (Entry Into Service), with an average estimate of $400-$500 millions required to reach the EIS since initial development. An estimate of additional 650 M$ to reach Full Rate Production (FRP) from EIS based on the historical data available for small utility aircraft categories is well posed. These data would make very difficult to survive to more than 4-5 brands if we assumes an overall market similar to LUA (Light Utility Aircraft) of 11000 vehicles in the next 30 years, with a total production rate of almost 350 vehicle per year, that implies almost 70 vehicle per year each company. It is true that a market size of this type would not justify the amount of investment observed today for AAM and the crowd of competitors battling for leadership, and therefore however the motivation for this race is to be found in a unique reason:
Everyone hopes or has made evaluations of a much wider potential market.
In addition all the players believe in a costant growth in the next thirty years and more, differently from the sensible decline of demand for small utility aircraft observed after 1990, going down from 250 per year to no more than 100. This caused the overall production limitation with the disappearance of many products and brands.
Therefore a fundamental question is wether or not AAM products will experience a similar decline following initial market penetration. The fall in demand of small turboprop was certainly due the jet propulsion technology and to the difficult transition between LRIP (Low Rate Initial Production) and FRP (Full Rate Production) that hystorically consumes financial resources similar in amount to those expended in development. It is true that typically, the transition between LRIP and FRP occurs at about 10-15 percent of the expected total production quantities depending on complexity, level of technology and Operational Capability Evaluations data, and this would be the change from a financial expenditure flow to a positive rate of earnings. In the past many Light Utility aircraft failed in this phase and as consequence it was not possible staying profitable.
This was certainly an important factor but it is not the only one. For example, another element to take into consideration was the competition from other transportation modes both for people and goods, in particular the ground transport for short distance, less that 200-250 miles. After the 1990s there has been an exponential growth in road transport for goods and people and in Europe also by fast train. This growth still continue with almost a linear trend. The light aircraft market has therefore suffered in the past from competition from trucks and fast trains. As far goods are concerned the cost of kg/km of small aircraft is still of order of magnitude higher than that of a trucks, and light aviation was not capable to capture the rapid growth of freight market due to higher cost, operational limitations and complexity in regulations.
Similar phenomena occurred for passenger where for the small distance cost and operational flexibility of personal car transportation and fast train where by far more convenient than small aircraft to bring people to the airport hub for the international flight.
Therefore the real challenge for future air transport, in order to avoid the decline of demand following the initial low rate production, is to maintain competitiveness with respect to ground transport for both goods and people, i.e. the future aircraft for urban and intra-urban mobility will have to maintain costs and operational flexibility to be kept convenient for time and costs compared to cars, trucks and fast trains.
In fact, most of those who are heavily engaged in the development of AAM believe that this challenge can be won. They believe that the mix of new products and technologies that is being developed is capable of creating a market that goes well beyond 10,000 machines in the next 30 years. This is because AAM involves new completely new types of aircraft operating in the airspace. In the urban environment, electric Vertical Takeoff and Landing (eVTOL) aircraft with a typical seating capacity of three to four passengers will likely be the first to enter the market. These aircraft can take off and land like a helicopter, but they do so with a significantly less noise and at a very low operating cost (maintenance, fuel and crew) due to electrification and automation. Initially most of these aircraft are expected to be piloted (leading to faster certification and entry to market) and as technology matures, they are likely to become autonomous later in time. In the suburban and regional context eVTOL, electric Conventional Takeoff and Landing (eCTOL) and electric Short Takeoff and Landing (eSTOL) aircraft are all likely to operate. eSTOL aircraft are similar to conventional aircraft, as they do need a runway, but the required runway length can be very short 600-1000 feet (?), meaning that in principle existing fields, open spaces, and rooftops of warehouses or large buildings could serve as potential “runway” candidates. Cargo delivery is of particular interest for special goods such as life-saving drugs (low weight, fast availability), especially for those hospitals that do not have a heliport and must assure the delivery service to ground vehicles that may get trapped in the road traffic before reaching the airport.
It is very likely that the amount of investments necessary to arrive at the FRP of the new AAMs will be very high also due to the large number of technological barriers that will have to be overcome. In fact AAM is generally believed mainly enabled by electrification and automation (SPO Single Pilot Operation, or FAO Fully Autonomous Operation) which facilitate many potential uses, including passenger transport, cargo/package delivery, emergency services/public good (e.g., air ambulance, EMT transport, etc.), aerial work (e.g., infrastructure inspection, photography, tourism, etc.). Yet a number of other critical aspects of primarily importance need to be deeply investigated, understood and subsequent action plans implememented with associated cost:
– Community Integration
– Airspace&Fleet Operations Management
– Individual Aircraft Management&Operations
– Aircraft Development&Production
– Airspace System Design&Implementation
Required operational capabilities and functions of a modern day urban platform and a vision for the future products taking into account the new enabling technologies need to be matured:
– New aircraft configurations
– High performance aircraft
– Efficient propulsion systems
– Greater weather tolerance
– Greater design and production agility
And in terms of processes and methods:
– Advanced design and engineering methods (model-based, digital engineering, etc.) along with advanced rapid testing enable more rapid commercialization.
– Certification process adapted for new technologies, materials, aircrafts, and manufacturing processes building on the regulatory frameworks in place and enable more rapid incorporation of safety improvements.
– Mature manufacturing and supply chains, including secure digital processes to track parts and ensure authenticity and traceability, will enable rapid ordering and receipt of parts
In general ambitious scope and focus of designers and manufacturers of future AAM aircraft/vehicles are design, certify, and produce airworthy, mission-capable, integrated aircrafts/vehicle that operate safely in all weather conditions required by the mission, with adequate passenger comfort and sufficiently low levels of noise. As a consequence aircraft/vehicle specifications are affected and driven by the following factors as well:
– Aircraft Design & Integration
– Airworthiness Standards & Certification
– Aircraft Noise
– Weather-tolerant Aircrafts
– Cabin Acceptability
– Manufacturing & Supply Chain
However, in addition to these product aspects that have certainly found adequate attention in the player’s business plans, it is not clear the level of attention that players are posing to some fundamental problems and questions that concerns authorities, regulatory bodies and public acceptance:
Multimodality and environment: Environmental aspects will be a major driving factor in shaping the future (air) transport sector. There is a need to investigate the complementarity/substitutability of different modes of transport for certain distance segments: what the role of air transport will be, how future networks will change (e.g. in terms of the distribution of air traffic over different distance segments), how airline fleet composition will change and effects on airport operations. How can better integration of air transport with other modes of transport contribute to reducing the environmental impact of the door-to-door journey?
Understanding passenger expectations. Understanding passenger expectations (with regard to origin–destination, travel time, comfort, ecological impact and reliability) is a continuous activity linked to the flexibility/changes over time in demand for modes of transport. How can aviation monitor passenger expectations to improve its offer? How will changing passenger preferences shape the future multimodal transport system (e.g. airport products and services and the airport as a multimodal node).
UAM impact on multimodality. Evaluation of the impact of UAM on intermodal solutions, both passenger and freight, integrated into the multimodal transport chain. The design of intermodal solutions should leverage UAM to connect different airports in the same urban area.
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