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Urban Air Mobility: An Airport Perspective (2023)

Chapter: Chapter 2 - Market Assessment

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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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Suggested Citation:"Chapter 2 - Market Assessment." National Academies of Sciences, Engineering, and Medicine. 2023. Urban Air Mobility: An Airport Perspective. Washington, DC: The National Academies Press. doi: 10.17226/26899.
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7   Market Assessment Chapter 2 assesses the UAM market by major market segments of the UAM value chain, including • Original equipment manufacturers (OEM) and service providers, • Infrastructure operators, • Flight service providers, • Maintenance, repair, and overhaul (MRO), • Fleet management, and • Physical security. The market assessment is intended to provide airport practitioners with an understanding of the trends within the UAM ecosystem based on the use cases of Passenger Air Mobility, Air Cargo, and Emergency Services. No precedent exists for UAM; therefore, it is critical for airport planners to first understand the basic principles of the overall UAM modality before creating a specific roadmap for UAM at their airport. The research team began by reviewing an extensive collection of UAM literature to capture the current state of the industry. Both generalist UAM papers and airport-specific documents were gathered as part of this review process, including the following: • Industry white papers and technical blueprints • Research institution, foundation, and non-profit reports • Airport initiatives for future mobility and sustainability • Municipal strategic documents and outreach to industry • Major press releases and newspaper articles • Federal, state, and local legislation for land use, general aviation, and the environment • Meeting minutes for standards development organizations • Construction practices and guidelines for airports • Applicable judicial cases • Expert interviews with industry and airport influencers The global COVID-19 pandemic has caused significant disruptions to travel and industries, yet the full impact at the time of this research is not yet realized. Based on these uncertainties, the market assessment is based on the most recent information available and the best assump- tions at the time of writing. C H A P T E R 2

8 Urban Air Mobility: An Airport Perspective 2.1 Methodology The research team defined a set of guiding principles for the market assessment to ensure that rigorous methods were applied while allowing for practical considerations for nascent technology with undefined operating models and uncertain regulatory pathways. The team established the following guiding principles for market sizing from prior case studies in nascent technology, including con- sumer technology, shared mobility services, and mobile telephony: 1. Markets are defined for use cases. Market sizing should be informed by specific use cases—there is always a seller (e.g., a flight service provider with specific routes) and a buyer (e.g., a type of customer). Each market segment is therefore determined by the relationship between buyer and seller for a given use case. 2. There is no single view of the world. The unit of analysis is sized according to individual use cases, and each use case can be sized for multiple scenarios. Depending on customer adoption and other key “swing variables” and sensitivities, each use case can realize a down- side, baseline, or upside scenario (as discussed further below). Practical planners will benefit by replacing individual opinions with objectively verifiable market assumptions regarding how the UAM airport market will take shape. 3. Markets are segmented to provide bottom-up detail. Each use case scenario is broken down into the most fundamental underlying components to get at the root of who is buying what service or product. To this end, the research team sizes OEM, operator, developer, security, maintenance, and service supplier segments. Furthermore, every segment is sized by use case for each scenario. 4. There are two inflection points, with piloted flights emerging in 2025, followed by early scaling efforts in the run-up to 2035. Every segment is sized by use case for each scenario, that is, approximately 2025 and 2035. Airport planners can use these inflection points, driven by tangible differences in customer adoption, as real-life markers to prioritize budgets and adjust their operational plans as appropriate. 5. Real markets have customers who are willing to pay. The research team avoids using top- down assessments based on aggregate math. All markets (nascent and mature) become tangible and real with volume (how many customers) and price (how much customers might be willing to pay). 6. Adjacent industries are proxies. As a starting point for key assumptions and uncertain variables, the research team seeks a foundational understanding of similar or adjacent indus- tries and related technologies. Future developments in UAM may be uncertain, but related mature markets can provide useful models for study. 7. Model transparency is important—if assumptions change, market sizing changes with them. At its core, the market sizing model is robustly mathematical. All core factors (technol- ogy, consumer, regulatory) are shaped into quantifiable, measurable assumptions, each with a magnitude and metric. 2.2 Use Cases The market assessment is focused on the following three emerging use cases because of their relevance to airport operators and planning efforts: • Passenger Air Mobility: the transportation of passengers from point to point • Air Cargo: the transportation of goods or cargo from one place to the other • Emergency Services: the use of AAM aircraft primarily for medical and emergency purposes Table 1 breaks the three main use cases down into sub-use cases to provide an at-a-glance view of the type of services, vehicles, and infrastructure needs associated with each use case. Key Points • What are the forecasted markets for UAM? • What major use cases are viable?

Market Assessment 9 Use Cases Description Aerial Vehicles Selected Airport/Vertiport Needs Commercial Passenger Services Air Taxi • On-demand transportation within the city, similar to conventional ride sharing. This includes transport to and from the airport from STOLports/vertiports in the city. STOL/VTOL aircraft • Fast charging stations or hydrogen fueling facilities. • Terminal facilities with amenities to accommodate passengers. Air Metro • Scheduled intra-urban flights within selected locations. Commuter/ Regional Flights • Inter-city connections and air services between smaller communities. Air Cargo Delivery Goods and Last-Mile Delivery (<250 lb.) • Fast delivery of light freight (e.g., food, pharmaceuticals, parcels) in urban areas to private residences (light freight). • Goods delivery in urban areas to a hub along a predefined route. • Delivery of time-critical medical supplies (blood, organs, vaccines) to hospitals. Small VTOL UAS • Charging stations and hydrogen fueling facilities. • Warehouses/small storage facilities. • Unmanned aircraft system traffic management (UTM). Heavier Air Freight (>250 lb.) • Delivery of freight to final destination by larger VTOL or STOL UAS. Regional air freight and road feeder Small UAS (VTOL/STOL) Large UAS (VTOL/STOL) • Charging stations and hydrogen fueling facilities. • Warehouses and storage facilities. services with manned or unmanned STOL or CTOL aircraft. • Forwarding of containers or bulk goods over a route with little infrastructure. • Transport of time- sensitive, high-value industrial supplies. STOL/CTOL feeder aircraft • Cargo loading areas and equipment. • UTM. Medical / Emergency Services Medevac • Transport of medical emergency personnel to site of accidents. • Medical evacuation of injured or sick patients to closest hospitals. STOL/CTOL feeder aircraft Large UAS (VTOL/STOL) • Fast charging stations or hydrogen fueling facilities. • Dedicated direct access from landside to tarmac (medevac). • UTM. Emergency Management • Transport of firefighting personnel. • Rescues from hard to reach/emergency areas. Medical / Emergency Supplies • Dropping lifebuoys or helicopter emergency supplies to site. Small UAS (VTOL/STOL) Table 1. Advanced Air Mobility use cases summary.

10 Urban Air Mobility: An Airport Perspective Case 1: Passenger Air Mobility Because the stated focus of the Airport Cooperative Research Program (ACRP) 03-50 is the 2025–2035 period, the research is primarily interested in the Air Metro use case for passenger transport. Air Metro resembles existing public transit options (e.g., subways and buses) in that vehicles follow a predictable schedule of stops along predefined routes; however, it will not have the capacity of current public transit options in the near term because of limited seat capacity. Air Metro is distinguished from air taxis, where passengers hail pick-up services on-demand and travel point-to-point. The air taxi market is briefly addressed later in this section because the literature uniformly views Air Metro as the initial passenger use case that will serve as the bridge to air taxis in the longer term (2030–2040+). To estimate sizes for various segments of the currently small-to-nonexistent Air Metro market, for rigorous bottom-up calculations, the research team developed the following assumptions for the Air Metro use case by considering existing UAM market literature, available data from industry stakeholders, and existing aviation standards (i.e., regulation and certification): • Vehicle Assumptions include the following: – Capacity: Vehicles are assumed to bear one to four passengers, reflecting a majority of existing designs (100+ concepts in development) and the constraints of likely electric propulsion. – Autonomy: Early vehicles are initially expected to be piloted, then transition to remotely piloted, with increasingly autonomous operations, based on the current state of autonomy research and development and nascent certification procedures. – Performance: OEMs are estimated to target a useful range of 60 miles and cruising speed of 150 miles per hour (mph) for vehicles, citing the specifications desired by early industry conveners of the UAM vision. – Cost: The upfront cost per vehicle is anticipated to range between $280,000 and $481,000, as indicated by the early market data made available by several vehicle manufacturers. • Operational Assumptions include the following: – Passenger Load: Trips are expected to average a passenger load of three riders, as reported by market studies accounting for the shared route model of Air Metro. – Recharging Time: A battery recharging and/or swapping time of 20 minutes is assumed, based on the desired specifications stated by early UAM vehicle operators. – Mission Time: A single mission is projected to take 64 minutes, calculated by combining estimated time spent in flight, passenger loading/unloading, and charging/battery swap times. – Daily Trips: Each vehicle is estimated to complete 11 missions per day, calculated by dividing an assumed 12 working hours per day using Visual Flight Rules by the estimated mission time. • Route and Network Assumptions include the following: – Layout: Routes for Air Metro are expected to take the form of a distributed hub-and-spoke model, according to existing UAM market studies. – Scheduling: Vehicles will operate with predictable service schedules along predetermined routes. – Early Use Case: A shuttle service between airports and city centers is believed by many industry stakeholders to be an early proving ground for Air Metro before reaching scale. • Infrastructure Assumptions include the following: – Types: At maturity, a distribution of small, medium, and large vertiports with eVTOL capacities of 1, 4, and 12 landing pads, respectively, is assumed to service Air Metro. This understanding is based on current urban heliports. – Components: A vertiport is expected to include concrete vehicle landing pads and charging stations and, for larger stations, a passenger terminal, based on the current industry vision and existing heliports and small airports.

Market Assessment 11 – Locations: Early vertiports may build on existing infrastructure (e.g., the tops of parking garages) or use open land near highway interchanges, according to concepts offered by early conveners of the UAM industry. – Cost: It is assumed that the cost to develop vertiports will be analogous to heliport and industry development in urban areas and airports. This assumption must be modified by the components of vertiports, such as all-electric charging stations, that must be appraised individually. A Note on Air Taxis: The eventual Air Taxi use case will share many similarities with its pre- decessor, Air Metro. Because of the on-demand nature of air taxi service, the team has identified multiple points of differentiation from Air Metro, including the following: • The team assumed a higher passenger load for Air Metro than for Air Taxi (average of three riders versus just one rider). • The team expects that Air Taxi will require a higher density of vertiport infrastructure than Air Metro because of its vision of widespread door-to-door service. • It is anticipated that Air Taxi may only emerge as a viable use case upon the maturity of Air Metro, given the additional complexity of airworthiness certification and safety standards associated with the goal for Air Taxi to be ubiquitous—taking off, landing, and flying over a greater range of regions. Case 2: Air Cargo The study’s scope for the Air Cargo use case is limited to last-mile delivery because current industry trends and technological developments do not point toward long-haul cargo or heavy freight delivery being viable in the near term. Last-mile delivery refers to expedited on-demand delivery of a parcel by a small Unmanned Aircraft System (sUAS) from a nearby distribution hub to a neighborhood receptacle. The methodology that the research team used for closely analyzing the Air Cargo use case resembled that used for Air Metro. In conducting the analysis, the team again derived assump- tions believed to shape the emerging Air Cargo (last-mile delivery) use case. The following assumptions about Air Cargo were developed from available market research estimates, data released by manufacturers and operators, Unmanned Aircraft System (UAS) delivery pilot programs, and the existing Federal Aviation Administration (FAA) regulatory state: • Vehicle Assumptions include the following: – Capacity: Delivery payloads for sUAS are expected to be capped at 5 pounds, reflecting the current FAA regulations applied to UASs under Part 107. – Autonomy: Delivery vehicles are assumed to be remotely piloted or autonomous small unmanned, according to the early industry delivery pilot programs. – Performance: An average sUAS speed of 43 mph and 30-minute flying time per single charge was calculated by averaging the top speeds and flying times for available systems. – Cost: The average cost for a new delivery sUAS is assumed to be $3,000, from a source reporting on a major commercial delivery fleet. • Operational Assumptions include the following: – Recharging Time: Recharging time following each delivery is anticipated to be 60 minutes, according to commonly available sUAS models on the market. – Delivery Distance: Door-to-door roundtrip deliveries are assumed to fall within a 9-mile range and take 30 minutes or less, based on current industry estimates. – Mission Time: A cycle time of 95 minutes per delivery mission was determined by combining maximum delivery time, target recharging time, and loading/unloading time.

12 Urban Air Mobility: An Airport Perspective – Daily Trips: A single sUAS is projected to complete on average 10 delivery trips per day, calculated by dividing estimated hours of operation (5:00 am to 10:00 pm) by mission time. • Route and Network Assumptions include the following: – Scheduling: Last-mile deliveries will be unscheduled, with routes being computed when an order is placed, based on the known plans of commercial sUAS delivery fleets. – Early Use Case: Industry experts believe that rural delivery may see faster growth than urban because of larger relative cost savings, ease of flights over a lower-density population, and a general lack of a roadway grid. • Infrastructure Assumptions include the following: – Types: Delivery requires vertiports at distribution hubs for loading and neighborhood receptacles for receiving and securing delivered parcels. – Capacity: Each vertiport is assumed to house an average of 13 cargo pads, with each able to process up to 10 deliveries per hour. Further, it is assumed that each vertiport maintains a fleet of 133 drones or 10 drones per cargo pad. Case 3: Emergency Services The Emergency Services use case can encompass a variety of services but for the purpose of the market assessment, it will focus on Air Medevac. Air Medevac is defined as future medical transport flights using vehicles such as hybrid-electric and eVTOL jets. Emergency Service’s use of VTOL distinguishes it from the air ambulance market’s use of a conventional helicopter to transport patients to the hospital for emergencies and occasional appointments. The team believes that Air Medevac with eVTOLs will be a viable substitute for helicopter services and that the adoption rate of this use will grow over time (from 1–10 percent in 2025 to 10–50 percent in 2035). Assumptions play a critical component in this study’s bottom-up market assessment of the Emergency Services use case. Medical transport is held to higher standards than general passenger transport. Given the FAA’s strict existing standards for accreditation from the Commission on Accreditation of Medical Transport Systems Air Ambulance, it is likely that Emergency Services will be held to a similar or even higher standard. Many of the following assumptions were derived from the wealth of publicly accessible information available from the mature air ambulance market, which the research team used as a proxy for Air Medevac: • Vehicle Assumptions include the following: – Capacity: Seating capacity for Air Medevac vehicles is expected to be larger than Air Metro to accommodate a single patient, a pilot, multiple medical staff, and the associated patient care equipment. – Autonomy: Vehicles are expected to transition from being piloted in the beginning to remotely piloted or autonomous as the technology develops, but there will always be personnel in addition to the patient onboard. – Crew Certification: Based on existing air ambulance standards, it is assumed that each vehicle may require four full-time pilots, four full-time nurses, and four full-time paramedics to be certified annually. – Cost: The upfront cost per vehicle is anticipated to range between $280,000 and $700,000, as indicated by the early market data made available by several vehicle manufacturers. • Operational Assumptions include the following: – Mission Distance: An average Air Medevac flight distance of 52 miles is used based on existing rotor air ambulance data for relatively shorter medical air transport trips. – Mission Time: The expected average mission time of 130 minutes is used, also taken from existing rotor air ambulance data. – Recharging Time: Projected range of recharging time is between 20 minutes (from research on battery-swapping) and 120 minutes (from available vehicle concept specifications).

Market Assessment 13 • Route and Network Assumptions include the following: – Mission Components: Air Medevac missions are categorized into three sub-missions (response, transport, and return), mirroring the existing air ambulance mission structure: ▪ The response is defined as the time between the vehicle’s initial dispatch and its arrival on the scene. ▪ Transport is the time from the vehicle leaving the scene to dropping off the patient at the medical center. ▪ Return is the time from departing the medical center to arriving back at its station, in many cases including charging time. • Infrastructure Assumptions include the following: – Types: Air Medevac is expected to use bases with terminals that include four pads with two charging stations each, according to available market literature. – Cost: A single Medevac base is forecast to cost between $5.1 million and $10.5 million, based on estimated developmental costs for similarly sized rotor air ambulance operating bases. 2.3 Downside, Baseline, and Upside Model Assumptions The market forecast encompasses three foundational scenarios: a downside case, a baseline case, and an upside case. This range of scenarios provides a more thorough market forecast to capture the inherent uncertainty in predicting the future. Each case is predicated on certain assumptions that have downstream effects on conclusions drawn from the model. In the forecast, these cases are used to assess each segment of the market for two single-year periods: 2025 and 2035. Downside Case In the downside forecast, each segment is sized for every use case with a lower customer adoption or willingness to pay assumption. That is, either the volume or price (and in select cases, both) is more bearish than in the expected baseline or upside scenarios, and it can be assumed that obstacles to the implementation of UAM have been more prohibitive than anticipated. The downside case, therefore, represents the lower bound of the UAM market’s potential size. This has led to the following key assumptions: • Technology has been slow to mature to an acceptable degree, driving up the per unit price of various UAM services (the use cases) and thereby reducing demand. • Regulatory groups have been reluctant or unwilling to work with industry and community stakeholders in developing new standards and guidelines, leading to reduced and delayed access to major markets, thereby reducing the volume of services available. • Operations in 2025 are limited in scope to early-stage pilots in a small number of major cities, leading to low penetration in markets that the UAM industry is working to disrupt (e.g., urban passenger transportation). Baseline Case In the baseline case forecast, the research team provides a more realistic estimate of the UAM market volume and willingness to pay, predicated primarily on taking publicly available statements about the state of technology and policy at face value. Using this model, the following assumptions are outlined: • OEM estimates of the readiness level of their vehicles are more or less accurate. Consequently, it is reasonable to assume that some operations will take place in 2025, and early-stage regula- tory policies will be in effect to enable this market.

14 Urban Air Mobility: An Airport Perspective • Adoption rates of each use case for UAM will be similar to (and calibrated against) other novel technologies and paradigms that have been met with steady and gradual adoption when introduced to new markets. Upside Case The final forecast scenario for each market segment, called the upside case, is sized to reflect that either the total volume of UAM access is higher than anticipated, the customer’s willingness to pay is higher than expected, or both. Several assumptions follow from this framework, including the following: • UAM implementation begins in the very near term and, by 2025, has matured into a growing and ground-breaking new industry. • Regulators, industry partners, community representatives, policymakers, and others have coalesced on a more or less shared vision of UAM implementation, and it has therefore enjoyed a smooth and popular rollout. • Unlike many other nascent industries, major setbacks have been limited in scope or have been resolved quickly enough that neither the public nor regulatory groups have had cause to reduce customer demand (willingness to pay) or government-sanctioned access (volume). In other words, in the upside case, technological hurdles have been surmounted, robust but fair regulatory policies have been implemented, and the public has been on board with UAM from an early stage. In the upside case, UAM market penetration is strong early on and grows even stronger with time. The complete market for UAM can be segmented into several categories that, taken together, constitute the complete value chain (see Figure 3). Figure 3. Market segments for the UAM value chain.

Market Assessment 15 Segments are defined based on the value provided, who the customer is, and what each customer is willing to pay. For an airport, both the airport operator and the airline earn revenue based on operations conducted at the actual site. However, what distinguishes the operator from the airline is that the airline is a customer of the operator, whereas the airline’s customers are the passengers. In this example, airlines are much more willing to pay airports for access than passengers are to pay airlines. 2.4 Original Equipment Manufacturers and Suppliers OEMs are the stakeholders in UAM responsible for the system integration and assembly of vehicles. Because vehicle development is a costly and time-consuming process and there are many prospective eVTOL designers, the OEM market segment involves significant assumptions and justifications, such as the following: • OEMs and suppliers have a limited role as vehicle developers, despite some OEMs that have announced interest in providing flight services directly. The scope of this segment is vehicle sales. • Because there is currently no high-volume production of eVTOL or hybrid vehicles, some specu- lation is necessary regarding the pricing structure. The team used three prices (a downside, baseline, and upside to match the business cases), based on prices of rotor-wing aircraft with comparable characteristics to anticipated VTOLs. • Because this study examines market sizes across 2025 and 2035, the operating lifespan of VTOLs will be comparable to those of general aviation aircraft; a vehicle produced for 2025, for example, will likely still be in operation in 2035. The team accounted for this in determining the total number of vehicles for each time period. The size of the OEM market is expected to grow substantially in all cases between 2025 and 2035, with a 2025 base-level air passenger (air taxi and metro) market size of $110 million, which is expected to swell to nearly $18 billion by 2035 (Table 2). By contrast, the Air Cargo market is expected to be more substantial in the near term (2025) but grow at a more moderate pace as it assumes a greater share of the parcel delivery market. 2.5 Infrastructure Developers The necessary infrastructure for vehicles, drones, passenger intake, and support staff consists of a wide variety of buildings servicing mission-specific elements of UAM. Such infrastructure must include, at minimum • Vertiports, from which passengers will arrive and depart; • Cargo loading facilities designed for automated missions; • Terminal buildings for passenger screening and pre-processing; and • Facilities for dedicated traffic monitoring, communications, and navigation equipment. 2025 2035 Downside Baseline Upside Downside Baseline Upside Air Metro $55–$60 $110–$120 $275–$300 $1,130– $1,160 $17,600– $17,700 $24,800– $25,000 Air Cargo $1,000– $1,010 $1,900– $2,000 $3,950- $4,050 $1,100– $1,120 $2,100– $2,200 $4,100– $4,200 Air Medevac $5–$7 $30–$35 $95–$100 $40–$42 $125–$135 $500–$510 Table 2. OEM and supplier market assessment (in millions of U.S. dollars).

16 Urban Air Mobility: An Airport Perspective For infrastructure developers, Air Cargo will be the dominating UAM use case in the next decade, with a downside estimate of $14 billion in 2025 and $53 billion by 2035 (Table 3). In contrast, for the same scenarios and years, Air Metro will grow from $100 million to $24 billion, and Air Medevac will incrementally grow from $10 million to $1.3 billion. What largely drives this marked difference is that Air Cargo, which uses drones rather than human-carrying vehicles, faces far less regulatory uncertainty. Drone cargo delivery pilot programs have already begun in several countries and states of the United States and are much more likely to take over large portions of the cargo delivery model by 2025 than Air Metro is to revolutionize passenger transport. As Air Cargo will likely be a much larger market by 2025, building the necessary support infrastructure will require more investment. Although UAM is a novel industry, construction and building for aviation are not. The research team based its assumptions for infrastructure development on the following existing parallels: • Take off/landing pads required for vertiports will be functionally analogous to existing helicopter pads, whose dimensions and requirements are specified by the FAA and whose construction costs are well established. • Because UAM will likely be initially limited to specific geographies that are currently unknown, the team used median nationwide construction costs (e.g., materials, labor) for the market pricing scheme. • The downside, baseline, and upside market scenarios are predicated on determinations of the volume of UAM traffic in each period and the capacity of vehicle trips each vertiport can support. The latter assumption will depend on the recharge time of production vehicles and regulatory requirements. • Construction costs for UAM infrastructure will be analogous to those associated with current aviation infrastructure. The cost of a terminal building for a small, regional airport (with passenger capacity similar to that expected of UAM vertiports) will be comparable to that of a terminal for UAM. 2.6 Infrastructure Operators Like other industries, infrastructure operators for UAM sit at the nexus of public-facing business-to-business and business-to-customer operations. Like airline operators, UAM infra- structure operators are responsible for running and maintaining the facilities for passenger and cargo operations. Their responsibilities may include • Passenger terminal organization, upkeep, and maintenance; • Management of arrival/drop-off zones and vehicle storage; • Maintenance and operation of support infrastructure (e.g., surveillance equipment); and • Passenger and cargo security screening. 2025 2035 Downside Baseline Upside Downside Baseline Upside Air Metro $100–$150 $210–$220 $560–$570 $23,950– $24,050 $41,050– $41,150 $64,100– $64,300 Air Cargo $13,900– $14,100 $24,000– $26,000 $50,000– $53,000 $51,000– $54,000 $101,300– $101,500 $227,900– $228,100 Air Medevac $10 $69 $253 $72 $275 $1,305 Table 3. Infrastructure developer market assessment (in millions of U.S. dollars).

Market Assessment 17 Similar to the infrastructure developer segment described above, the use case for the infra- structure operator segment is consistently the largest in the Air Cargo market. For all scenarios and time periods, the Air Cargo infrastructure operator market is one to several orders of magnitude larger than Air Metro or Air Medevac. In the baseline scenario (Table 4), the Air Cargo market will reach nearly $2 billion by 2025 and just over $8 billion by 2035. In contrast, Air Metro and Air Medevac’s infrastructure operator sizes at the same two points in time will be $14 million and $33 million in 2025 and $2.7 billion and $130 million, respectively. Air Cargo is forecast to begin and mature earlier than Air Metro and Air Medevac, largely because of the lower regulatory barrier for drone package delivery than for passenger-carrying flights. This principal assumption explains the high-level takeaway from Table 4, but additional assumptions include the following: • Passenger vertiports will include facilities across a range of sizes and traffic capacities: 30 percent of vertiports will be single-pad, 50 percent will have four pads, and 20 percent will have 12 pads. • Air Metro vertiport operator revenue can be triangulated by examining airport revenue per passenger for various services (e.g., parking, concession, or airline fees), airport fees from shared mobility services, and airport customer fees. • Air Cargo infrastructure operators’ share of cargo revenue is similar to distribution hub operators for existing package delivery services. • The volume of Air Cargo infrastructure operators is based on the forecasted package delivery volume, ignoring specific geographical requirements. • Air Medevac base operator revenue will be functionally identical to existing air ambulance base operator shares of industry revenue. • Air Medevac adoption rates are predicated on operational cost savings of VTOL aircraft compared to traditional helicopters. 2.7 Flight Service Providers Flight service providers are responsible for interfacing with revenue-generating customers to service their various transportation needs, including • Transporting paying passengers along pre-planned routes (Air Metro), • Last-mile delivery of small parcels on-demand (Air Cargo), and • Emergency medical transport to treatment facilities (Air Medevac). The impact of COVID-19 has increased the use of e-commerce, with more consumers pur- chasing items online (Bhatti et al. 2020). Given the anticipated growth in the volume of online retail sales over the next decade and the forecasted delivery savings that drone delivery offers, the team projects significant revenue and growth for Air Cargo flight service providers. The baseline forecast shown in Table 5 indicates a projected market size of nearly $12 billion in 2025, 2025 2035 Downside Baseline Upside Downside Baseline Upside Air Metro $7 $14 $35 $1,650 $2,680 $3,970 Air Cargo $580 $1,960 $4,910 $2,190 $8,000 $21,535 Air Medevac $5.9 $33 $98 $41 $130 $508 Table 4. Infrastructure operator market assessment (in millions of U.S. dollars).

18 Urban Air Mobility: An Airport Perspective which will increase to nearly $48 billion in 2035, as a result of growth in parcel delivery demand and because the drone delivery market will assume a larger portion of that demand. Similarly, the team anticipates rapid growth in Air Metro flight service between 2025 and 2035, growing from $110 million to $20.6 billion. The baseline case includes a more modest growth in Air Medevac, from $400 million to $1.6 billion. For Air Medevac, the more stable market for air ambulance services in the United States, which are largely a function of population, drives growth. The following model assumptions, developed through existing research into market trends and underlying market limitations for each use case’s flight service provider market assessment, incorporate expected changes in demand: • Per-passenger pricing for Air Metro will remain relatively fixed over the examined time period and will be set at rates slightly above existing shared mobility services per mile fares. • Ticket revenue for flight service providers was calibrated by indexing publicly available ticket revenue data against transportation volume. • Air Cargo market projections are based on forecasts by Morgan Stanley regarding differences in expected adoption rates for urban and rural drone-based parcel delivery. • Conventional air ambulance trip prices are dependent on fluctuations in aviation fuel. The stable price of electricity implies that Air Medevac trip pricing will be more consistent. • The per-flight cost charged to customers of Air Medevac will depend on insurance/Medicare reimbursement and on the costs associated with personnel and equipment (e.g., onboard medical staff and consumable medical supplies). 2.8 Maintenance, Repair, and Overhaul MRO is broken out into its own segment in this report. This segment, which comprises the processes and activities involved in maintaining a fleet of transportation service vehicles, may function differently in a UAM context than in legacy industries. Owing in part to the specialization of technologies developing for UAM, as well as to the forecast “distributed” nature of UAM, MRO services may be fulfilled by third-party service suppliers, who constitute their own market. In the baseline scenario for MRO in 2025, shown in Table 6, Air Metro and Air Cargo have markets sized at just over $500 million each, compared to Air Medevac, which is expected to be 2025 2035 Downside Baseline Upside Downside Baseline Upside Air Metro $54 $110 $270 $12,730 $20,620 $30,600 Air Cargo $8,320 $11,730 $18,540 $31,300 $47,960 $81,266 Air Medevac $28 $400 $1,180 $276 $1,600 $5,880 Table 5. Flight service provider market assessment (in millions of U.S. dollars). 2025 2035 Downside Baseline Upside Downside Baseline Upside Air Metro $130 $500 $750 $3,500 $4,140 $4,770 Air Cargo $360 $510 $810 $1,365 $2,090 $3,540 Air Medevac $1.2 $17 $51 $12 $70 $256 Table 6. Maintenance, repair, and overhaul market assessment (in millions of U.S. dollars).

Market Assessment 19 slightly less than $20 million. Just 10 years later, in 2035, both Air Metro and Air Cargo increase to $4 billion and just over $2 billion, respectively, while Air Medevac will increase to around $70 million. Although Air Cargo will likely be adopted more quickly than passenger-carrying use cases, the significant increase in complexity between vehicles that carry passengers and the drones that carry cargo is the primary driver in per-vehicle MRO costs. As a consequence, despite dis- parities in their overall market sizes, the Air Metro use case will have a disproportionately large MRO market. Similar to the discussion of infrastructure developers, above, real-world parallels exist between the MRO likely required for UAM and the MRO required in adjacent industries such as commercial aviation. Therefore, assumptions for this section leverage publicly available infor- mation about these industries and include the following: • The UAM MRO market size was calculated by determining the range of MRO costs incurred by major airlines as a percentage of their total revenue and scaling that to the expected overall size of the UAM services market. • The size of the drone cargo market was calibrated by calculating the percentage of airlines’ MRO costs and published estimates of individual drone repair costs and scaling them up to the size of the drone cargo delivery market. • Publicly traded air ambulance corporations have published annual MRO and revenue figures. The team compared the airline MRO costs mentioned in the previous two points to deter- mine the anticipated Air Medevac MRO costs. 2.9 Fleet Management Fleet management encompasses operational logistics and management of vehicles, excluding procurement and maintenance. The oversight of deployed vehicles is crucial for maintaining safe UAM operations and ensuring mission completion. To ensure that vehicle operators are tracking pertinent vehicle data, a robust software system and employees tasked with monitoring operations are necessary. Both fleet operators and regulatory entities are involved in this segment of the market. Regulatory bodies must set certification and licensing standards to enable fleet managers to engage in UAM operations. Fleet management includes • Ensuring continual airworthiness (all use cases), • Operator certification and licensing (all use cases), • Operations management and tracking vehicle data (e.g., monitoring vehicle energy use), • Vehicle health and safety monitoring, and • Fleet logistics. The fleet management market segment is expected to be relatively small because of the smaller staffing requirements and the low cost of management software (see Table 7). Adjacent industries with fleet management and logistics departments show that limited staff is needed to conduct management operations. 2025 2035 Downside Baseline Upside Downside Baseline Upside Air Metro $0.10 $0.16 $0.65 $0.41 $1.8 $9.79 Air Cargo $108.5 $190.7 $400.2 $235.2 $434.6 $952.4 Air Medevac $0.47 $0.86 $1.75 $0.77 $1.30 $4.5 Table 7. Fleet management market assessment (in millions of U.S. dollars).

20 Urban Air Mobility: An Airport Perspective The Air Metro and Air Medevac use cases reflect lower valuation figures than the Air Cargo use case because of the large difference in predicted fleet sizes. Air Cargo operations will reach larger adoption rates at earlier stages, so substantial fleet operation and logistics costs are expected, including the following: • Estimated Air Metro fleet management labor costs used employment numbers from the Washington, D.C., public transit system financial records. Labor needs and costs for fleet management for ground-based public transit served as a proxy for the UAM Air Metro ecosystem. • UAM Air Metro fleet maintenance labor costs were calculated by determining the range of operational labor costs incurred by a major public transit system (e.g., Washington Metro- politan Area Transit Authority) as a percentage of total revenue and then scaling that cost to the expected overall size of the UAM Air Metro market. • After determining the estimated fleet management labor values, the cost of fleet management equipment was determined by multiplying the cost of fleet management software and hardware per vehicle by the number of vehicles for UAM Air Metro determined in the Air Metro OEM segment analysis. • The costs of the labor and the fleet management equipment were added together for each Air Metro case and timeframe to produce the total estimated fleet management segment valuations. • The value of the fleet management segment for Air Cargo was determined by discussing costs with current fleet management service providers geared toward sUAS operations and multi- plying their per-vehicle fleet management cost estimates by the number of Air Cargo vehicles calculated for the given years and cases. • The research team considered the current value of air ambulance services to be similar to the values associated with UAM-conducted Medevac operations, for lack of a better valuation. • After determining air ambulance logistics and labor costs on a per-trip basis, the team multi- plied the per-trip payroll by the number of estimated flights. 2.10 Physical Security Protecting physical technologies and ensuring passenger safety are both involved in estab- lishing comprehensive physical security. The platforms used to operate and monitor physical infrastructure are similar across markets. Therefore, it is likely that physical security measures will be adopted from adjacent industries (e.g., general aviation). Physical security includes • Screening passengers and ensuring onboard passenger cooperation, • Protecting physical infrastructure from tampering and vandalization, and • Having an operating system that monitors physical UAM infrastructure and technologies. After assessing the literature, the team determined that physical security differences between Air Metro, Air Cargo, and Air Medevac could not be distinguished in a meaningful way. The value of the physical security market segment for Air Metro is relatively low because of the estimated number of trips in the early adoption phase (Table 8). Even in the upside case in 2025 and 2035, 2025 2035 Downside Baseline Upside Downside Baseline Upside Air Metro $0.250 $0.495 $1.2 $0.566 $7.4 $12.4 Air Cargo — — — — — — Air Medevac — — — — — — NOTE: “—” indicates that the field is not applicable. Table 8. Physical security market assessment (in millions of U.S. dollars).

Market Assessment 21 the limited number of trips for the Air Metro use case does not provide a clear picture of the amount of physical security and related infrastructure needed. Physical security does not represent a large portion of the value chain, particularly during the early stages of the market. In addition, the role of physical security in the Air Cargo and Air Medevac use cases, in all scenarios, was found to be too low for meaningful analysis. However, the development and implementation of physical security infrastructure and procedures could have a larger impact on airports than on other UAM destinations, given the predicted high traffic volume. In this analysis, • Estimates for physical security expenses were based on the figures in the Port Authority of New York and New Jersey 2018 budget report, which provided proxies acceptable for UAM Air Metro physical security estimates; • The total amount spent on physical security by the Port Authority was converted to a cost of security per trip basis; and • The cost of security per trip was then multiplied by the estimated number of UAM trips calculated in the OEM Air Metro sheet.

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Urban Air Mobility (UAM), or its generalized version, Advanced Air Mobility (AAM), is an emerging aerial transportation approach that involves the operation of highly automated aircraft for a safe and efficient system to transport passengers or cargo at lower altitudes of airspace within urban, suburban, and exurban areas. UAM initiatives are advancing in many communities and will likely bring many societal changes.

The TRB Airport Cooperative Research Program's ACRP Research Report 243: Urban Air Mobility: An Airport Perspective provides a comprehensive examination of the emerging UAM industry, with a particular focus on its impacts and opportunities for airports.

Supplemental to the report are an Airport AAM Preparation Checklist and a UAM Airport Assessment Toolkit.

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