Podcast: Picking The UAM Winners – The Inside Story

In this week’s podcast, we go behind the scenes for a glimpse into how the cover story of the Jan 11-24 issue of Aviation Week & Space Technology took shape. Senior Editor Guy Norris is joined by Executive Editor for Technology Graham Warwick and Sergio Cecutta, founder and partner at SMG Consulting, to talk about picking the winners in the urban air mobility (UAM) race. Sergio explains the thinking behind SMG’s new Advanced Air Mobility Reality Index - https://aamrealityindex.com - an effort to pierce the hype surrounding this hot new sector of aviation.

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Below is a rush transcript of Aviation Week’s January 7, 2021, Check 6 podcast.


Guy Norris:                 Welcome to Aviation Week's Check 6 Podcast. I'm Senior Editor Guy Norris. And today we're going to be picking the winners in Urban or Advanced Air Mobility.

                                    Before we get into this, it's fair to say that, just like about a hundred years ago, we're at the threshold of probably a 21st-century golden age of aviation. But again, just like in the 1920s, there may be a big difference between the reality and the hype. For example, after attending a 1928 air show and seeing 104 aircraft on display, Henry Ford predicted that there would be some consolidation coming along in the industry. And of course he was absolutely right. Will we soon see something similar with Advanced Air Mobility? You bet we will.

                                    But anyway, let's talk about telling fiction from fact as there's hundreds of AAM proposals out there. And today to talk about this we're joined by Graham Warwick, Aviation Week's Executive Editor for Technology and our guru on all of this UAM and AAM technology, and Sergio Cecutta, who is the founder of SMG Consulting and who has developed a new “reality index” system for actually ranking these AAM ventures.

Graham, I think we'd like to start with you because you've just listed a sort of top six UAM entrants and they're featuring on our next cover story, which you've just put together. Perhaps you could give us a bit of a background to hear where we start from here.

Graham Warwick:       Thanks Guy. I'm just looking up what the word guru means, as I'm not sure! So it was getting towards the end of 2020 and it's been a tough year, 2020, but actually for the Advanced Air Mobility, the AAM, or the Urban Air Mobility, the UAM, market,it's actually been a year of considerable progress.

                                    I thought it was a good time - myself and our Editor in Chief Joe Anselmo thought it was a good time - to try and pull together a picture of who's in the lead when it comes particularly to Urban Air Mobility. And I looked specifically at passenger-carrying urban/regional air mobility, I didn't go into cargo or anything like that.

                                    I started to pull it together and have been a number of milestones this past year - as you know yourself. You went out to see Joby. You were the first journalist that was able to go there, see what they were doing. You were given precedented access, I've been on so many webinars that have referenced your story because it gave people a great insight into one of the leaders in the industry. So I thought I would take a look [at the market]. And I'm a journalist, so It's very qualitative.

                                    I looked at what had happened in the year in terms of funding, flight test progress, other sort of milestones and really there were a lot for 2020. And I was in the process of pulling all this together when my email goes bing and there's an email from Sergio. He's put together this thing called the Advanced Air Mobility Reality Index, which I insist on calling the “readiness index” and I apologize for that. But he calls it the Reality Index and he says it's an effort to try and distinguish the real from the hype.

                                    And I found it really fitted well with what I was doing. And it gave me another person's view, or another organization's view, of essentially the same players. Now there were lots of areas where we agreed and there were some areas where we didn't quite agree because we had different viewpoints. And I think Sergio will get into some of the aspects of his Reality Index, but he has a longer term view maybe than I was taking.

                                    But it really helped me. It's really hard to tell the leaders apart. So you look at EHang in China and they've made tremendous progress, but with a very limited vehicle and a very supportive regulatory environment. And then you look at Joby who's got much more complicated and capable vehicle, but a much more challenging regulatory environment. And I found it hard to be able to really make a decision as to who was where.

                                    But by bringing Sergio and his index in, that helped me understand the ways to differentiate this. The leaders don't really change that much between our two views, but it was really interesting to have this different look in on the market. There are very definitely leaders and followers, and it's either funding or it's test progress or it's some other aspect, but there are those that are making the running and those that are kind of waiting and seeing or whatever. And it was really interesting to go through that process.

Guy Norris:                 Thank you Graham. And Sergio, perhaps you can tell us about the index and what you've been doing and what you've found out. Let's hear from you on this.

Sergio Cecutta:           Thank you Guy. The whole idea behind the index was motivated by the fact that when you look at the industry, you see all of these entrants, not just companies, but also vehicles. And we wanted to understand a little bit about these hundreds of companies.

                                   And for sure there are some clear winners. But out of all of them, which are the ones that we will see certifying vehicles, producing vehicles and making thousands of them. And so this was the idea behind the Advanced Air Mobility (AAM) Reality Index. And the question that it's trying to answer is what is the likelihood of a certified aircraft entering service, and then and OEM producing it in thousands of units per year.

                                    It's not something that wants to say who is the most advanced right now, but it looks at data to understand which are the ones that are going to be crossing the finish line. We try to have a very data-oriented approach, trying to take out any of the subjectivity. And we didn't want to penalize anyone on subjectivity because maybe you like their vehicle or you like their business case. We based our calculation on five different elements.

                                   Number one, it's the funding received by the company. That is important because, with no money, you won't get anywhere and considering that the talk is a quarter of a billion to a billion dollars just for the vehicle certification. With some people talking about $3-4 billio, when it comes to a vertically integrated aircraft and service like Joby, for example, is promoting or Jaunt wants to do.

                                   The second piece we look at is the team that leads the company. It is important to be visionary, but in aerospace it is as important to have people that understand what it means to build an aircraft, what it means to certify an aircraft, what it means to produce an aircraft. And if we look at the Lilium team, for example, it is made up all of Airbus people that came from the Hamburg facility, and other facilities, and they know how to put together an airliner.

                                   The other piece is the technology readiness rating and, for this one, we use the good old TRL scale of NASA and we're just trying to understand the vehicle into which they're putting the majority of their money. How far advanced it is towards TRL 6, which means having proven it in a relevant environment, all the way to a TRL 9, which is basically when the vehicle is ready for production.

Then there are two last pieces that are very important and, being an index, it actually carries weights for each one of these five components. And these two pieces are very important to us. Number one is the certification progress of the vehicle: do they have all of the pieces together to be certified? Are they talking to the authorities? Are they just waiting? And last, but not least, is the production readiness. It's easy to build one. Some companies will be able to build 10. Some company will be able to build hundreds. But, right now, no company can prove that they can build thousands.

                                   And this is probably one of the things where Graham and I got into some discussion, this fact that some of these companies, while they might not have a vehicle that's flying, we consider them maybe more advanced than other people with vehicles that are flying, because they have proven production capability behind them, for example an Embraer or a Hyundai.


Guy Norris:                 Graham, obviously you've seen your top six or top five. How do they compare with Sergio's equivalent and what do you say is different about the way that you've calculated those positions?

Graham Warwick:       The big difference really is in where Sergio's index rates Hyundai and Embraer, or Eve as it's now called. And there are very good reasons why Sergio puts them there... and he's articulated that it's their production capability that is proven. And so I didn't take such a long-term view, but when I understood what was behind Sergio's index, I could see why he ranked them high.

                                    I kind of wonder whether UAM should be an automotive market and not an aerospace market, because if you look at Hyundai, their commitment in terms of R&D funding, their capability in terms of volume production, their technology commitment in terms of electric vehicles and fuel-cell vehicles. And then you look at this incredible commitment that the South Korean government is making towards commercializing UAM. You have to say that the stars are aligning for Hyundai. But they won't be on the market before 2028.

                                    And I f put them down in the second tier because they wouldn't be on the market until 2028. Whereas, if you look at Joby, Joby is the only one that's going to be doing what Uber Elevate set out to do, which is commercial service over a U.S. city in 2023. Joby is the only one that's positioned to do that. But as Sergio's index makes clear, that's just the start. They have to then be able to take what is a relatively complex vehicle, lots of moving parts, lots of electronics, lots of motors, et cetera, and they've got to get that to some scale of production well beyond what aerospace is used to.

                                    Now, they have investment from Toyota, help from Toyota, which I think puts them where they are in the ranking, which is, both of us agree, number two. But it's interesting when you look at Hyundai because they have this commitment to mobility. And then you look at Eve, or EmbraerX as it was, that has this proven ability of Embraer to take very disciplined decisions, to really understand the market, then move, then meet a target date.

                                    One of the really interesting things about Eve is they have absolutely refused to set a date on when they will do something. And they'll tell you is because we are Embraer. We do not commit to a date until we can meet it. But that also means that when they do finally give you a date you know they're going to be on the market on that date.

                                   So I can see why they came on so high when you look at Sergio's longer term, more holistic index. I was kind of looking more at who's going to move first. Who's going to make this market happen, I suppose, is what I'm trying to say. I think the really interesting thing is where it comes to choosing between EHang and Joby, and then Volocopter and Lilium. It really helps you to look at the different approaches they're taking and therefore their different level of readiness.

Guy Norris:                 Graham, you quoted Sergio in your story, which we will have to tell listeners will be coming out in the next few days. We'll be going live in those few days. And Sergio you can perhaps say more about this, but one of the aspects of course is the certification, which you've described. And you've mentioned the fact that it's the only market you've identified in which EASA and the FAA do not have equivalency or reciprocity. I knew I was going to stumble over that one! But then China's regulatory approach is specific to EHang and it's really helped them move quickly. Can you just describe a little bit more about your perception on that side of it Sergio? Where you see the importance of certification?

Sergio Cecutta:           Yes, absolutely Guy. Certification is very important. We know there are many companies that are capable of prototyping. However, certification is very difficult and the higher what they call the Design Assurance Level, or DAL, is the harder it is to certify because the requirement for certification needs to be baked into the program since the very beginning.

                                   And so the discrepancy that we're seeing between the approach from EASA and the approach from the FAA is concerning for the simple reason that, as we said, we always have this reciprocity between different authorities. Between the FAA, between EASA, between the CAAC [in China], between the authorities in Brazil, Australia and Japan. And that allows manufacturers throughout the world to certify new vehicles quite quickly, because once the local or domestic authority has certified it, then it is easier to continue through certification in different countries.

EASA right now is taking the stance that these vehicles are a new category. And that is why they have these new regulations they're creating with the Design Assurance Level A. That means failure overall at the level of the aircraft of 10 to the minus nine. That's the same expectation of safety as for an airliner like an Airbus A320 or a Boeing 737.

                                   The FAA is taking instead the approach that these are airplanes that are going to be certified as Part 23, therefore they're more an offshoot of general aviation or small business jets. Therefore they've taken this approach that maybe the level of safety should be DAL B or DAL C, that is 10 to the minus 8 or 10 to the minus 6. But the issue here is the fact that the FAA has not yet decided which one is the level of certification that they will require.

                                    One specific case that I think is a little bit more of an outlier, as Graham was saying, is EHang. The Chinese government is making this technology, this Advanced Air Mobility as one of their new priorities. We know that aerospace has been a priority for the government for the past 10 years, but with this new Advanced Air Mobility there is a push for it to become another big priority. That's why we see maybe a more lenient or a different environment - not any less safe, but now with the same level of equivalency with what we have in the West. But we think that EHang will certify their vehicle in 2021.

One last point that I wanted to make going back to what Graham was saying, that I think it was really interesting. And he asks if this market will be dominated by car companies.

If we look at the car company world, their world is being shaken at the very foundation. We have autonomy that will reduce the number of cars that need to be on the road. We have electric cars that have reduced the maintenance necessary for a car. A lot of the conventional stream of revenue for these car manufacturers is actually going to disappear. It is very normal for these companies to refashion themselves in mobility providers. And this is what Hyundai has done.

                                    It's now a mobility provider that not only provides cars, but they will also provide this urban air mobility component. Now what are the two advantages for being a car company? Number one, we already said it: these manufacturers can produce a car a minute, if not more. Toyota makes about eight to 9 million vehicles a year. And so that is a big number compared to aerospace where production rates in the high hundreds are considered enormous.

And last but not least, there is also a second piece. The batteries that are at the very foundation of many of these vehicles are also a limiting factor for these vehicles. And many are looking forward to the introduction of solid-state batteries that bring completely new chemistry and allow not only an increase in the available power, but also reduced size, therefore weight. And into which market will the solid-state battery will come first? We see it coming into automotive.

A company like Hyundai could start deploying the solid-state battery in their cars, making it easier for them to then move them onto an aircraft, as opposed to other companies that don't have this connection. The same thing could be said, for example, for Joby, where Toyota in the Tokyo Olympics in 2021 will introduce a prototype that is based on solid state battery.

Guy Norris:                 Thank you. In case you haven't noticed, Sergio's got a very distinct connection there with Italy. When it comes to automotive, he really does know what he's talking about. I can attest for that, because I've seen his Italian car models.

                                   And so I guess we're coming to the end. We have heard that the cost of certification and entering production in the is market has been put at up to over a billion dollars by most expectations. For those companies whose business model involves both manufacturing and operating the vehicles, the bill could be even higher. We know the stakes are high, but so are the rewards.

                                    I urge you to look at Graham's story and to follow up with SMG Consulting's index. And I think that's about a wrap for this week's Check 6. Special thanks to our producer Donna Thomas. Join us again next week for another edition of Check 6, which is available for download on iTunes, Stitcher, Google Play, and Spotify. If you like what you've heard, please give us a positive review. We appreciate your feedback and take care and be safe. Thank you for listening.


Guy Norris

Guy is a Senior Editor for Aviation Week, covering technology and propulsion. He is based in Colorado Springs.

Graham Warwick

Graham leads Aviation Week's coverage of technology, focusing on engineering and technology across the aerospace industry, with a special focus on identifying technologies of strategic importance to aviation, aerospace and defense.