INTERVIEW: Kay Wackwitz of Drone Industry Insights assesses the key regions for AAM

Kay intro­duces us to Drone Indus­try Insights and the exten­sive reports it pub­lish­es about the drone mar­ket and Advanced Air Mobil­i­ty.

It recent­ly pro­duced a lengthy report about the emerg­ing mar­ket, so Kay shares some top lev­el take­aways and goes into detail about the info­graph­ics on the mar­ket in dif­fer­ent regions.

We talk about the areas which are show­ing a lot of promise and ask Kay to give his thoughts on where he believes the mar­ket is head­ing in 2024, as some com­pa­nies edge towards com­mer­cial­i­sa­tion

Q: Can you share more details about your back­ground and what led you to set up Drone Indus­try Insights? 

I basi­cal­ly spent my work­ing life in com­mer­cial avi­a­tion after work­ing in air­craft main­te­nance and over­haul for over a decade, I earned my degree in Aero­nau­ti­cal Engi­neer­ing and worked as an engi­neer in main­ly air­craft engine over­haul.

“But lat­er with the emer­gence of drone tech­nol­o­gy in 2014, my co-founder and I refo­cused and set out to make this mar­ket more acces­si­ble for a wide range of stake­hold­ers, know­ing that these drone spe­cif­ic fea­tures like elec­tric propul­sion and auto­mat­ed flight can play a big role in com­mer­cial avi­a­tion. 

“So Drone Indus­try insights, basi­cal­ly qual­i­fies and quan­ti­fies the com­mer­cial drone and the AAM mar­ket in very great detail. We offer this knowl­edge in reports, free pub­li­ca­tion but also client-spe­cif­ic projects.

Q: Can you share more about the most recent reports you’ve done? What top­ics do they cov­er?

Our reports focus on dif­fer­ent aspects of the com­mer­cial drone and AAM mar­ket. We have reports that focus on mar­ket size and growth, reg­u­la­tion, mar­ket play­ers, AAM appli­ca­tions such as drone deliv­ery or pas­sen­ger trans­port. We also have reports on unmanned traf­fic man­age­ment, ver­ti­ports and much more. 

All of these reports con­tain knowl­edge that has been aggre­gat­ed in a bot­tom up approach. So we mea­sure and analyse actu­al data and ver­i­fy and aggre­gate it, which sounds a lot of work and believe me it is, but that knowl­edge enables peo­ple to make bet­ter busi­ness deci­sions and to be pre­pared and bet­ter under­stand the mar­ket land­scape that they are access­ing.

Q: Drone Indus­try Insights recent­ly pro­duced a lengthy report about the emerg­ing AAM mar­ket. Are you able to share any top lev­el insights for our audi­ence?

Absolute­ly. So in our fore­cast, we con­sid­er all the impor­tant ele­ments like type cer­ti­fi­ca­tion, but also prod­uct life­cy­cle, pro­duc­tion ramp ups, oper­a­tion with and with­out a pilot on board, reg­u­la­tions and many more aspects. 

So in our AAM report, it is quite a com­plex, inter­con­nect­ed ecosys­tem that basi­cal­ly fol­lows the approach­es and rules of com­mer­cial avi­a­tion. At the same time, how­ev­er, it also involves stake­hold­ers that are rather unusu­al for com­mer­cial avi­a­tion. So local munic­i­pal­i­ties and city coun­cils, urban plan­ners, pub­lic trans­porta­tion, res­i­dents and busi­ness­es. These are also instru­men­tal in deter­min­ing the real local added val­ue. That’s very impor­tant for the AAM space as a start­ing point. 

Today, the eVTOL man­u­fac­tur­ers are in the spot­light to build safe, fast and effi­cient, but also com­fort­able and eco­log­i­cal­ly friend­ly plat­forms. That’s a lot of box­es to tick.

So far, the over­all flight per­for­mance is not quite there so a lot of devel­op­ment work needs to go into these plat­forms to make them more fea­si­ble and pro­vide the men­tioned val­ues to the mar­ket. 

Anoth­er impor­tant point is financ­ing. The race to entry into ser­vice has begun and an impor­tant mile­stone is still to come for every­one which is type cer­ti­fi­ca­tion. This process involves a lot of test­ing and estab­lish­ing com­pli­ance with exist­ing reg­u­la­tions. How­ev­er, these reg­u­la­tions are based on stan­dards and many of these AAM-spe­cif­ic stan­dards have not yet been devel­oped. 

So this means that tra­di­tion­al stan­dards are being used instead, lim­it­ing the poten­tial of AAM plat­forms to trans­form com­mer­cial avi­a­tion. This puts an enor­mous pres­sure on the man­u­fac­tur­ers and it’s up to them now to fill the nar­ra­tive but also to com­ply with those exist­ing and future rules and stan­dards.

All that while the finan­cial run­way is get­ting short­er. Stock prices are get­ting low­er, so they are under a lot of stress and all of these dif­fer­ent ele­ments, from mar­ket size, financ­ing sit­u­a­tion, reg­u­la­tion, entry into ser­vice, are described in our mar­ket report in great detail.

Q: Can we talk more about financ­ing and in par­tic­u­lar, the trends you’re see­ing at the moment?

So instead of trends, I would rather describe them as motions because trends are pret­ty short term. 

These plat­forms have been in devel­op­ment for quite some time and there will still be time for them to be cer­ti­fied. Maybe the first one is eVTOL design. I think this is very inter­est­ing. 

It’s more like in ret­ro­spect to see what has changed over the last cou­ple of years, as you see that more and more designs con­verge into more or less the same set­up. So a lot more rad­i­cal designs are chang­ing to the typ­i­cal vec­tored thrust and sep­a­rate lift con­fig­u­ra­tions. 

There are still man­u­fac­tur­ers which have more spe­cif­ic or aggres­sive designs, but there’s a ten­den­cy towards one very spe­cif­ic design, such as six to eight pro­pellers and the wing con­fig­u­ra­tion. So there is that motion def­i­nite­ly on the tech­ni­cal side.

Anoth­er motion is kind of start­ing right now and it’s the search for alter­na­tive ener­gy sources and per­haps hybrid elec­tric propul­sion sys­tems. So the cur­rent spe­cif­ic ener­gy den­si­ty of bat­ter­ies is not com­pat­i­ble with cur­rent fos­sil fuel-pow­ered VTOL air­craft. vehi­cles. So they need urgent improve­ment.

The third motion we see is the search for fea­si­ble and viable busi­ness mod­els. So right now we’re in the face of test­ing for type cer­ti­fi­ca­tion and quite far away from an entry into ser­vice. But AAM plat­forms work great in areas with dif­fi­cult topog­ra­phy. What that means is fly­ing peo­ple or goods to remote islands, across mighty rivers, over snowy moun­tains or to places where there is no ground infra­struc­ture at all.

There­fore, you see the motion of some eVTOL man­u­fac­tur­ers now offer­ing car­go plat­forms on top of their pas­sen­ger plat­forms and kind of mov­ing away from urban and more to rur­al air mobil­i­ty. That that’s maybe the third motion I would like to men­tion.

Q: Are there any coun­tries that you’re see­ing in your opin­ion that are show­ing a lot of promise when it comes to drones and Advanced Air Mobil­i­ty?

Yes, total­ly. We have a spe­cif­ic report for this, but I will men­tion this one in the sec­ond. In our Drone Reg­u­la­tion Report, we rank dif­fer­ent coun­tries accord­ing to how advanced the frame­work cur­rent­ly is.

We call it the Drone Readi­ness Index and it shows how ready a coun­try is for drone and AAM tech­nol­o­gy. It con­sid­ers mul­ti­ple aspects of rule­mak­ing, like avail­able oper­a­tional envelopes, UTM, drone reg­is­tra­tion, pilot licens­ing and so on.

It shows that some coun­tries which are not direct­ly involved in the pol­i­cy mak­ing process of FAA or EASA often have a com­pet­i­tive edge over those who do. Aus­tralia, Switzer­land, Brazil and the UK to name a few are amongst the top coun­tries. 

For AAM there are a lot of rules and reg­u­la­tions avail­able that are the ones from manned or pilot­ed avi­a­tion. The ques­tion is which coun­try allows or sup­ports the required par­a­digm shift first? So away from the tra­di­tion­al con­trol of the air­space, towards a more flex­i­ble and dig­i­tal con­trol. The gov­ern­ment holds that enor­mous pow­er of change, but the ques­tion is, which one will be the first one to actu­al­ly roll up their sleeves and do it?

Q: How can Drone Indus­try Insights fit into the AAM mar­ket and what role can it play as it scales up? 

So like in the com­mer­cial drone space, our task is to con­stant­ly mon­i­tor and assess the AAM mar­ket as well. I believe that a well edu­cat­ed mar­ket is a sta­ble and pre­dictable mar­ket. It’s the per­fect basis to build a busi­ness upon. So to help peo­ple make the most of this tech­nol­o­gy and to be suc­cess­ful, we’ll con­tin­ue to pro­vide valu­able infor­ma­tion, insights and data to a wide range of stake­hold­ers. 

The AAM mar­ket is extreme­ly dis­rup­tive and high­ly reg­u­lat­ed at the same time. And all this com­bined with the dynam­ics of social impact, prof­itabil­i­ty, safe­ty, eco­log­i­cal respon­si­bil­i­ty and many oth­er aspects calls for a ratio­nal, objec­tive voice that puts things into the right light. And that’s us.

Q: Is Drone Indus­try Insights plan­ning to work on more reports in future?

Yeah, absolute­ly. So I think that we are in many aspects scratch­ing the sur­face with this tech­nol­o­gy and the whole ecosys­tem. As the ecosys­tem is quite big and a lot of these dynam­ics are some­what of a chick­en and egg prob­lem.

We see the same things in elec­tric dri­ving i.e. there are no ways to charge your car, because there is not enough demand, so what comes first? The charg­ing infra­struc­ture or elec­tric car? So this goes on and on and I see that we’re absolute­ly on the same track here with AAM because you can’t just fly those plat­forms every­where. You need charg­ing infra­struc­ture, cer­ti­fied land­ing sur­faces, air­space inte­gra­tion and com­mu­ni­ca­tion links. 

All of those things need to be in place before you can start fly­ing. That’s a big task. 

So by untan­gling this ecosys­tem and help­ing those indi­vid­ual stake­hold­ers who are all play­ing their role to bet­ter under­stand what’s going on and to help them build a strat­e­gy, all of these things will def­i­nite­ly be con­tent in future reports. 

Q: Where do you think the indus­try could be in the next five to 10 years? 

Very good ques­tion. When you come across a crys­tal ball to pre­dict the future like you say, please let me know!

There’s a lot of progress being made. How­ev­er, I think the next big mile­stone for this indus­try is type cer­ti­fi­ca­tion. We’re in the phase of the heavy lift­ing and think a lot of test­ing will be done this year. 

We will see a lot of firsts, but will also prob­a­bly see a cou­ple of fails. To bor­row a quote, ‘if you’re not break­ing things, you’re not inno­vat­ing hard enough’. So I hope the safe­ty sen­si­tive com­mer­cial avi­a­tion rule­mak­ers and share­hold­ers remain calm in this essen­tial phase of flight test­ing. 

There’s absolute­ly no rea­son for defama­tion or short sell­ing. Long sto­ry short, I’m very opti­mistic for this year and we will see the start of com­mer­cial and type cer­ti­fied oper­a­tions by 2026. The next few years will be excit­ing, but the next big mile­stone is yet to come.

Q: I think I’d love to hear your thoughts on the edu­ca­tion process when it comes to AAM?

I think it’s one of the most impor­tant aspects. I under­stand all the man­u­fac­tur­ers are in the process of design­ing a plat­form that per­forms well and is safe and qui­et; they are com­plete­ly occu­pied by that work. 

But on the oth­er side, you have a soci­ety that needs to be con­vinced this tech­nol­o­gy will make sense for them.

Recent­ly, the Deputy May­or of Paris named AAM and I quote, ‘a total­ly use­less and a hyper-pol­lut­ing gad­get for a few ultra priv­i­leged peo­ple in a hur­ry’. This is a very one sided view, but depend­ing on the spe­cif­ic appli­ca­tion you want to use it for, it’s not total­ly wrong either. 

So the chal­lenge to iden­ti­fy prop­er­ly run ser­vices that add val­ue to soci­ety has just start­ed. At the eVTOL Insights con­fer­ence in Lon­don back in 2023, we talked about e‑scooters in Paris. They are every­where in all the major cities now and Paris was the first one to ban them, because this spe­cif­ic kind of micro mobil­i­ty was no longer work­ing for them. That is an extreme­ly pow­er­ful state­ment to ban a cer­tain mode of trans­port from your city and AAM has to prove it makes sense for peo­ple to have it in their city. 

The stakes here are much high­er, as you have to build this ground infra­struc­ture, make those adjust­ments to your air­space and bring so much elec­tri­cal pow­er to the land­ing and take-off sta­tions. It’s unbe­liev­able how much mon­ey you would need to invest into an urban air mobil­i­ty set­ting to get it going, only for it to be banned a few years lat­er, after peo­ple under­stood this tech­nol­o­gy sound­ed nice in the begin­ning, but ulti­mate­ly it just didn’t work for them.

It is extreme­ly impor­tant to edu­cate peo­ple about the pros and cons of this kind of new mode of trans­port. In my opin­ion, ver­ti­ports are strong­ly under­rat­ed and under­fund­ed. Repur­posed heli­pads would do, like we see in Man­hat­tan, but they need to be locat­ed in and become part of the city to add val­ue to res­i­dents beyond just eVTOL flights e.g. pro­vid­ing access to the Sub­way or hav­ing a shop­ping cen­tre below.

They are very ener­gy hun­gry plat­forms, so on top of a build­ing you need to pro­vide a lot of elec­tri­cal ener­gy. It’s a big, big task to get these things right so they add val­ue and for cities to be proac­tive and imple­ment it to their cit­i­zens. What is hap­pen­ing here, what impact would it have on you etc. 

You will def­i­nite­ly have a neg­a­tive impact for those who don’t want to see or hear those plat­forms, but what are the pos­i­tive impacts? To be able to com­mu­ni­cate clear­ly what peo­ple can expect from this tech­nol­o­gy will help make this a long-term suc­cess. 

Q: Do you have any final thoughts you’d like to share with our audi­ence? 

If you are busy in this mar­ket or mon­i­tor­ing the space, you’ll see that it’s mov­ing very fast and is an extreme­ly dynam­ic envi­ron­ment. But at the same time, you have to be patient. I think there is a dis­con­nect between the expec­ta­tions. It is a tru­ly Her­culean task to bring this new chap­ter of avi­a­tion into exis­tence.

I hope and wish all those indi­vid­u­als all the social and finan­cial back­ing required to cre­ate prod­ucts and ser­vices that beyond finan­cial prof­it, add val­ue to soci­ety and change avi­a­tion to a much bet­ter ver­sion of itself.