Subscribe
Close
  • Free for qualified executives and consultants to industry

  • Receive quarterly issues of Area Development Magazine and special market report and directory issues

Renew

Personal VTOL Aircraft Take Off: What It Means for U.S. Manufacturing

Aerospace and defense players are recognizing the potential opportunity of leveraging their existing capabilities to create and then dominate the emerging personal VTOL market.

2017 Auto/Aero Site Guide
Rendering of Vahana, a single-passenger autonomous personal VTOL aircraft, to be developed under Airbus’ “Urban Air Mobility” programs.
Rendering of Vahana, a single-passenger autonomous personal VTOL aircraft, to be developed under Airbus’ “Urban Air Mobility” programs.
In one of the more iconic scenes from the hit movie Back to the Future, the character of “Doc,” played by Christopher Lloyd, turns to Marty McFly (Michael J. Fox) and says “Roads? Where we’re going, we don’t need roads!” Fast-forward to 2017 and over the past several months we have seen some very serious players announcing the development of personal vertical takeoff and landing (VTOL) aircraft. The flurry of news has left many wondering if we are about to enter the future envisioned in the movie Back to the Future. Does this portend the end of the aerospace market as we know it? Or is it an opportunity for the sector to drive convergence and build new markets? Uber Elevate believes it will have operational vehicles in the sky within the next five years. And most experts seem to agree.

Competition Heats Up
In October, Uber laid out its plans for developing an “on-demand aviation” system using a network of small, electric VTOL vehicles, and in April announced a partnership with Aurora Flight Sciences to deploy an initial fleet of 50 eVTOL aircraft by 2020. In parallel, Airbus has launched a series of “Urban Air Mobility” programs including CityAirbus, a multi-passenger autonomous commuter VTOL aircraft; Vahana, a single-passenger autonomous personal VTOL aircraft; and Skyways, a collaboration with the National University of Singapore for parcel delivery using unmanned aerial systems. Similarly, Intel is investing in a series of drone businesses, including Volocopter, whose VC200 is expected to begin pilot-test operations offering an Autonomous Air Taxi service in Dubai during the fourth quarter of 2017.

As the competition continues to heat up so too are the time lines for production. For example, Uber Elevate believes it will have operational vehicles in the sky within the next five years. And most experts seem to agree. Uber does not plan to build its own drones. Rather, it expects that — given the current market trajectory and activity — the commercial VTOL market will rise to the challenge and deliver a variety of vehicle options by 2023. And there is certainly demand for new forms of transport, particularly in congested cities. According to a recent report by KPMG LLP, mobility services are expected to become a $1 trillion market by 2030. As noted in the KPMG LLP report titled “The clockspeed dilemma,”1 consumers are now looking for a “sexy, dynamic experience” from their personal transport choice. There’s no doubt that a VTOL aircraft will be sexy and dynamic. But for now the company is more worried about the various regulatory, technical, and infrastructure problems than about the development of the aircraft themselves.

A Potential Disruptor
While most of the players now leading the personal VTOL charge were born from either the auto sector or the technology sector, Airbus’s participation in the race toward a Back to the Future world suggests that some of the traditional aerospace players may see the emerging VTOL market as a potential disruptor.

Keeping this in mind, the fundamental question remains: does the investment represent a pre-emptive strike against a technology that threatens to erode the commercial airline market? The answer is likely not. The reality is that VTOL aircraft will be limited to inner-city and very short-haul routes, not only for technical reasons (electric batteries can only lift so much weight for so long), but also for purely financial reasons. Notwithstanding a massive and sudden change in the price of oil, commercial aircraft will remain the most cost-efficient form of air travel for many years to come. Airbus — like so many aerospace and defense (A&D) players — has recognized the potential opportunity of leveraging its existing capabilities to create and then dominate a new and emerging market adjacency.

Perhaps the investment is intended to demonstrate technological prowess. That is certainly possible. All of the aerospace original equipment manufacturers (OEMs) and suppliers are being challenged to remain on the cutting edge of innovation. Demonstrating the capabilities to bring together multiple new and untested technologies would certainly prove to customers that the company is serious about remaining at the forefront of technology.

However, the more likely answer is that Airbus — like so many aerospace and defense (A&D) players — has recognized the potential opportunity of leveraging its existing capabilities to create and then dominate a new and emerging market adjacency. The personal VTOL business may be in its infancy, but it is clear that it will be a big market. And if it is going to meet the growth expectations outlined by the likes of Uber, it is going to require hundreds and hundreds of new craft. Why should that business be ceded to a technology start-up when the OEMs have the experience, technology, and capital to win the market?

Preparing for the Future
Based on this view of the future, we believe there are five things that aerospace players should be doing to prepare for a future like the one envisioned in Back to the Future:
  1. Find your place in the world. Aerospace manufacturers — both OEMs and suppliers — must carefully consider where they want to play in the new environment and then invest in the right areas and capabilities to achieve that objective. Take a long-term view of market disruption.
  2. Look around for opportunity. Massive new markets are being created and commercialized all the time. Think about how your existing capabilities and technologies may answer a new need in adjacent markets.
  3. Make smart friends. Developing a VTOL aircraft — or any other new transportation technology — will require aerospace players to develop and cultivate an ecosystem of partners and suppliers that can innovate with them.
  4. Talk to the boss. Likely the biggest barrier to the commercialization of new forms of aircraft is regulation. It will take time for the FAA to get comfortable with the idea of personal VTOLs, particularly in an Uber-like model. Aerospace players will want to start working with regulators to define the market early on.
  5. Keep innovating. While the aerospace sector has never been an innovation laggard, it is clear that some companies are already investing into driving entirely new ideas and technologies through innovation and technology. Aerospace players will need to keep innovating if they hope to remain ahead of competitors from other sectors.
The views expressed are those of the authors alone and do not necessarily represent those of KPMG LLP.
Article Discussion

Follow Area Development

Share