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The high-flying industry: Urban Air Mobility takes off

November 10, 2020

The future of urban transport is in the air. And ahead of the industry lies a golden future

"We estimate that up to 160,000 commercial passenger drones will be in the air in 2050."
Portrait of Manfred Hader
Senior Partner
Hamburg Office, Central Europe

USD 90 billion will be earned in about three decades through Urban Air Mobility – the expansion of urban transport systems into the airspace – year on year. It will be a time in which 160,000 electrically powered air taxis will carry people to the airport or over traffic jams to their destinations. Roland Berger has examined the young industry for the second time in two years (the first survey took place in 2018) and summarized the results in the study "Urban Air Mobility – USD 90 billion of potential: How to capture a share of the passenger drone market".

The key message of the current study is formulated by Senior Partner Manfred Hader: "We estimate that there will be up to 160,000 commercial air taxis in the air by 2050. The UAM passenger industry will then generate revenues of almost 90 billion USD per year".

Air taxis have long been a reality

In the study, the authors therefore expect a bright future for electric-powered flying in urban areas. However – future is the wrong word. Because what sounds like science fiction is already a reality in China. Alongside the company EHang, a young UAM manufacturer (the company was founded in 2014) is already operating in the People's Republic, having already taken various passenger drones in its portfolio into the air. EHang plans to build 600 air taxis for passenger and cargo transport in 2021.This year there were only 20 due to the corona pandemic.

Investors are firing up the still young market with huge sums of money. USD 907 million flowed into the industry in the first six months of 2020 – despite the pandemic and the crisis in the aviation industry. This is more than twenty times the amount invested in 2016 (approximately USD 40 million). It should not be long before air taxis become a natural part of the European cityscape. At present, around 110 cities and regions around the world are working on solutions in this area, and the number of new players in the market is constantly growing. Startups and established aviation companies are developing air taxis and services for various sectors.

The promising future of urban air mobility has already begun.
The promising future of urban air mobility has already begun.

City Taxis, Airport Shuttles and Intercity Jets will dominate the market

At present, according to the authors of the study, there is a trend towards an initial focus on air taxis. Manufacturers are specializing (in roughly equal parts) in the production of three different types: City Taxis with a range of 15 to 50 kilometers will cover inner-city needs, Airport Shuttles with the same range will bring travelers to airports, and Intercity Jets, which can cover distances of up to 250 kilometers, will provide transport between major cities. "By 2050, Airport Shuttle and Inter City services together will take the lion's share, about 90% of revenues," says Manfred Hader.

Two developments are currently giving the industry a boost: firstly, public acceptance of the technology increases with every successful test flight, and with every drone delivery. At the same time, regulatory authorities such as the European Union Aviation Safety Agency and the US Federal Aviation Administration (FAA) are seriously addressing the issue, so that legal hurdles should be overcome in the near future.

But it is not only air taxi manufacturers who will get a piece of the 90-billion-dollar pie. An entire ecosystem is growing, making the market more disparate, and resulting in a number of different business models.

Five segments and four service offerings

  1. Air taxis as core business
  2. Service offerings in the area of maintenance and repair
  3. Service offerings in the area of flight operations
  4. Physical infrastructure (hangars, service centers)
  5. Digital infrastructure

Within the ecosystem, various service offerings will also emerge. The Roland Berger experts expect four different business model archetypes with different strategies:

  1. System provider
  2. Service provider
  3. Hardware provider
  4. Ticket broker

"Going it alone is simply not an option for any of the players. Partnerships across manufacturers, operators and infrastructure providers are proving to be an important success factor."
Portrait of Stephan Baur
Principal
Munich Office, Central Europe

How market participants position themselves correctly

For market participants it is crucial to focus on one segment and one business model in order to be successful in that segment. Depending on a company’s background, the authors of the study recommend different courses of action.

Established companies from the aviation or automotive sector should concentrate on their core business in order to generate the funds to enter the UAM. Once they have decided on a suitable strategy, they should not isolate themselves and should rely on close cooperation with complementary suppliers. "Going it alone is simply not an option for any of the players. Partnerships across manufacturers, operators and infrastructure providers are proving to be an important success factor", states Principal Stephan Baur.

Startups should position themselves in the market with the greatest possible publicity in order to generate further sponsorship through wider attention. Test flights can then prove the functionality of their concept.

Suppliers should consider which parts of the value chain they can cover and which subsystems they can supply. They currently have the advantage that the value chains have not yet been defined. Since it is also not yet clear which air taxis will ultimately prevail, they should concentrate on type-independent solutions.

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Study

The high-flying industry: Urban Air Mobility takes off

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Urban Air Mobility – an industry takes off. Investments are over 20 times higher than four years ago.

Published November 2020. Available in
Further readings
Portrait of Manfred Hader
Senior Partner
Hamburg Office, Central Europe
+49 40 37631-4327
Portrait of Stephan Baur
Principal
Munich Office, Central Europe
+49 89 9230-8041