Air taxi market is set to grow rapidly at a CAGR of 45.9% between 2022 and 2040
The global urban air mobility (UAM) market is readying for takeoff. Technological advances, bolstered by regulatory initiatives and government support, are providing impetus to market development. Several established aerospace, automotive and technology companies are entering the market amid a flurry of demonstrations and test flights.
While UAM vehicles will be used across a wide range of applications, air taxis will be the central focus of mass commercialization efforts. Dubai will be the launch pad for commercial air taxis, with services projected to begin by 2022. According to recent research by Frost & Sullivan, “Analysis of Urban Air Mobility and the Evolving Air Taxi Landscape, 2019,” the air taxi market is set to grow rapidly at a CAGR of 45.9% between 2022 and 2040. The market will initially be dominated by hybrid, piloted vehicles. Electric air taxis will make their debut after 2025, with autonomous aerial vehicles entering the fray after 2030.
Looking for First Mover Advantage
Confronted by urban congestion and overburdened road infrastructure, almost 50 cities across the globe are evaluating the viability of UAM. Most current programs are restricted to drone applications for cargo delivery, emergency response and surveillance. Over time, these initiatives are set to create conditions conducive to the uptake of air taxis.
Backed by strong government support and ongoing pilot programs, the UAE, New Zealand and Singapore are expected to be among the clutch of early adopters. Dubai is already on track to be the first city, globally, to commercialize air taxis. With the aim of launching these services within the next two years, companies like Volocopter and Ehang in collaboration with the UAE’s Roads and Transport Authority (RTA) have carried out advanced tests. New Zealand’s focus on the future of mobility is also evident; since 2017, Kitty Hawk Cora has conducted almost 1000 test flights in the Canterbury region. Singapore is also looking set to enjoy first mover advantage. Volocopter is working closely with a slew of government agencies to assess the feasibility of introducing commercial air taxi services in the city state.
Also in line to be early adopters are Brazil and Mexico who are set to leverage their expertise in helicopter taxis. Meanwhile, the U.S. has been the nerve center of UAM development, with almost 70% market participants based in the country.
An Evolving Ecosystem Marked by Collaboration
Today, at least 60 companies across the globe are working on developing and testing passenger UAM vehicles with the goal of commercializing them in the next decade. In a sign that air mobility will be an integral part of the future of mobility, almost all major automotive OEMs are anticipated to establish a presence in the UAM vehicles market over the next five years.
Cross-industry partnerships, acquisitions and investments have characterized the UAM market over the past two years. The $30 million investment in German start-up Volocopter by Daimler and its consortium partners and U.S. based Terrafugia’s acquisition by Geely, the Chinese parent company of Volvo, are just some of the many examples of such trends. The Uber Elevate program attempts to bring together UAM vehicle manufacturers, technology providers, real estate firms and government agencies with the objective of building an enabling ecosystem for commercial air taxi services and launching commercial operations by 2023.
Such collaborative endeavours will be a pre-requisite for successful air taxi commercialization. Companies will need to work closely with real estate firms to acquire land to construct and maintain air taxi terminals and incorporate landing pads in residential buildings.
In addition to collaborations with new stakeholders, the UAM market will also spawn novel aerial business models and services. Among these will be pay per ride models, leased corporate fleets, and applications like first responder, critical care delivery and security in urban areas.
An ecosystem will evolve gradually around UAMs, with a network of supporting businesses including maintenance, pilot training schools and infrastructure.
A Range of Applications Emerge
There are six distinct categories of UAM vehicles currently in development. These include passenger drones, lift+cruise, transitional, roadable aircraft, hoverbikes and electric helicopters. Greater design standardization will accompany market maturity to meet the specific application needs ranging from recreation and security to personal mobility and medical emergencies.
For example, hoverbikes— such as the Hoversurf S3 delivered to the Dubai police department in November 2018—are being envisioned for use in surveillance and emergency response applications. The Kitty Hawk Flyer is being visualized as a compact personal vehicle for recreational purposes. The CityHawk, being developed by Israel-based Metro Skyways, is being envisaged as an air ambulance. Ehang’s tie up with Lung Biotechnology PBC, a Maryland-based biotechnology company, targets the transport of transplantable human organs. Alauda Racing, an Australian based start-up, aims to use electric vertical takeoff and landing (eVTOL) vehicles as air racing cars!
Air Pockets in the Skies Ahead
While the sky is the limit, evolving regulations and safety issues remain key challenges on the path to mass acceptance and commercialization. High noise levels from propulsion and the lack of landing /takeoff infrastructure in congested cities pose additional hurdles. Cross-industry alliances and dedicated technological progress will help overcome some of these challenges.
Forward-looking regulations will critical for the UAM market to advance. Market participants should work synergistically with government authorities to create clear and positive legislation.
For more information on Analysis of Urban Air Mobility and the Evolving Air Taxi Landscape, 2019, please write to Joe Praveen Vijayakumar, Senior Industry Analyst – Business Strategy & Innovation, Mobility at JoeV@Frost.com