Interview: Roland Berger provides extra insight into recent Urban Air Mobility study
After Roland Berger published its latest study on the potential of Urban Air Mobility, which estimates the market to be worth $90 billion by 2050, eVTOL Insights spoke to principal Stephan Baur and partner Manfred Hader in more detail.
The report, which was published last month, also predicts about 160,000 commercial air taxis will be in the skies, and talks about the segment of manned Urban Air Mobility, or expansion of urban transport systems into the airspace.
Q: Roland Berger had published an earlier study about Urban Air Mobility. Have you noticed any big differences between that study and the most recent one?
Stephan Baur: “When we did the research for our first study in 2018, we saw that a lot of companies that were either already very active or wanted to go into Urban Air Mobility encountered four major challenges.
“One was when the market and autonomy capabilities would be ready. The second was about public acceptance. Third came regulation, and the fourth one was all about funding – basically, how to get enough money to move toward a commercial route in 2025 or maybe later.
“What we see now is that, two years later, regulation is no longer an issue, because the FAA in the USA and the EASA in Europe are already cooperating with Urban Air Mobility companies and operators to define the regulatory framework.
“Also, investment in Urban Air Mobility has increased sharply in the last one to two years. Nearly USD 1 billion was pumped into the industry in the first half of 2020, for example – more than 20 times the amount we saw in 2016.
“Companies are therefore left with two pressing challenges: the need to gain public acceptance and develop a viable business model.”
Q: Are you surprised at how much money has been invested in Urban Air Mobility this year, despite the global impact of Covid-19?
Manfred Hader: “The one has nothing to do with the other, to be honest. First, the coronavirus is not really impacting on longer-term projects such as UAM. At this stage, it is really about whether you believe in this kind of product or programme. That is how you place your investment bets.
“And second, the real reason why we have higher investment this year is because existing programme have already reached intensive testing and certification phases, which is where the money is required as this is the most expensive part.”
Q: Have you had any feedback on the new report? I imagine many people would be interested in your findings.
MH: “I actually find it amazing that a very broad audience – from students to potential investors – is reviewing this report and providing feedback. Right now, many companies are looking at the sector and trying to make up their minds whether and how to enter it. So they come to us for strategic and market entry advice.”
Q: What impact do you think this study can have on the Urban Air Mobility market going forward?
MH: “We’re not creating the market. We’re simply describing it and trying to see how things could work out in the future. And the study is targeted more at those companies that are already actively involved in the market, examining what their next steps should be.
“Let’s be clear. In a recent press interview, I said I don’t believe more than 10–15 per cent of the current players will still be there in ten years. We’re in a very early stage at the moment, with lots of players running around. And there are no real dominant designs. As soon as we do have them, we will see consolidation and drop-outs in this market.
“So we may well see a few more people venturing in, but we have already reached a point where big companies’ interest has been aroused. The bulk of investment so far has come from large automotive players that have put money in some of the start-ups or launched own activities. That is another sign of how the sector is maturing.
“If you step into the ring as a new investor or start-up, it’s going to be increasingly difficult to do something different and disrupt whoever is already there.”
Q: Your market model to estimate future UAM usage is based on four cities: Singapore, Los Angeles, Munich and São Paulo. Was there any particular reason why these cities were chosen? And what do you think operations could look like in each one?
SB: “What we did was look at all cities globally that have more than 100,000 inhabitants, i.e. a sufficient scale to establish Urban Air Mobility networks and services.
“Then we considered the demographics of these urban areas in terms of square kilometers and population density. This gave us four distinct ‘city archetypes’. One is Singapore, which only has a small area compared to the number of people living there and therefore a very high population density. And on the other hand, we have cities like LA, which is huge but has a relatively low population density.
“Based on these four archetypes, we looked at these cities and asked where you might be able to put vertiports or a landing site. We also analysed how many people commute to work in the city centre every day plus how many passengers arrive at and depart from each city’s airport, to get an idea of traffic flows.
“And then we did a simulation to estimate how many people would use Urban Air Mobility, given how this type of mobility can reduce travel time compared to other city transportation systems. We also factored in GDP effects and how open each city is to new technologies and innovations.”
MH: “In my view, Urban Air Mobility is going to be a city-by-city or project-by-project kind of topic. In each individual city, you have to ask how it would interlink with other transportation systems, because that is essential for the whole thing to work. There is no one-size-fits-all solution: It is always going to vary from one region to another.”
Q: What has Roland Berger got planned for 2021 and the next couple of years as Urban Air Mobility starts to gather more momentum?
SB: “Now that Urban Air Mobility has been widely understood, I think most companies are looking at which parts of the UAM ecosystem – which links in the value chain – will be the most attractive and the most profitable for them.
“Following this logic, our next study might analyse the entire Urban Air Mobility value chain. That would help companies identify which aspects are the most interesting to them – which ones they want to explore on their own and which they want to tackle together with partners.
“Another interesting topic, of course, is how public acceptance will develop over time. So we could also go deeper into the kind of roadmap that is needed and what steps must be taken to get the public on board.”
eVTOL Insights: “I fully agree, Stephan. We’re really keen to get this study out to the public so companies can share the findings with those who might not yet be aware of Urban Air Mobility.”
MH: “That’s the point. This study and the feedback we’ve already received shows one thing very clearly: Urban Air Mobility is a topic that is here to stay. That is why companies from aerospace OEMs to automakers, suppliers and infrastructure companies are showing an interest.
“Everyone is trying to make up their mind about what the right topic for them is and to what extent they should be personally involved. Like Stephan said, companies are trying to understand the outlook for those links in the value chain that they want to approach.
“That’s kind of what we expect to see in the next 12–18 months, and so that’s the kind of topic we will be working on.”
Q: Anything else you’d like to add that we’ve not covered?
SB: “From my perspective, one of the most important things for companies that are considering going into Urban Air Mobility is this: Once they’ve made up their mind about what they see as the most promising parts of the value chain for them, they need to think about how to get where they want to go. Can they do that organically, with their own resources, or do they need partners?
“Next, what business model do they want to pursue to get into these spaces? And how might this model need to evolve over time so they can achieve their goal. These will be the most important things going forward.”
MH: “These are exactly the questions we are being asked: where should we get involved, what are the business models and how can partnerships provide support. We’re talking about established firms competing in an ecosystem that does not yet exist.
“So it should be obvious to every observer that going it alone is not an option. eVTOL manufacturers might, for example, say to themselves: ‘If I want to come up with a solution for my clients, my competencies alone will not be enough, so we will need to team up with others such as vertiport operators or ticket distributors’. It’s going to be interesting to see who does what with whom.”
Dr Stephan Baur Principal at Roland Berger 
Manfred Hader Partner at Roland Berger
