The AAM industry had a “milestone year” in 2021 with record investment levels and a number of key industry players having gone public.
The next phase of development will be helped by investment levels “beyond US$10 billion dollars” according to Robin Riedel, Partner, McKinsey & Co, but he added the industry still had a long way to go in terms of creating business and customer experience models. “There’s real money now to develop these solutions, public acceptance has moved forward. We see the public much more engaged than before. We’ve seen a massive amount of incumbents stepping into this industry and starting to play roles including lots of aircraft orders we count over 6,600 by now of these modern aircraft being ordered by airlines, by leasing companies and so there’s real momentum that happened in 2021.”
Still many areas to “figure out”
Riedel said that although progress was being made with the aircraft, there was still many operational areas that still needed to be “figured out.” He explained: “We’re very technology focused in this industry and we’re looking at new vehicles, new capabilities but we must not forget that technology alone is not going to be enough. Even if we build the best aircraft, we need to figure out how to put it into business, how to make the customer experience great so there’s a lot still to be figured out. How do we operationalise this on top of all the challenges we have on technology, lots to do in the industry, lots to innovate on but we’re making good progress.”
Riedel said AAM differed from the rest of the aerospace industry as it was building whole new aircraft configurations with new propulsion systems, new digital flight controls, new business applications and a new customer experience. “All of it is new,” he said. “There is very little we can borrow, some of it we can build on but there’s a lot that just needs to get reinvented.”
AAM could take to the skies in mid 2030s
While the industry was receiving incoming investment at the moment, how it would pay for itself going forward was less clear. “It’s questionable, I guess, on how much more we will need to really get the industry to the scale what we want now,” said Riedel. “I would say there’s other industries like ride hailing which have really changed the way we live, however they haven’t really made money yet. Some of this might be a long investment up front before we really can see the benefits for investors or some of it might be that, all of the sudden it clicks and will scale up quickly, so that’s to be seen but it’s going to require quite some patience.”
Riedel thinks the potential offered by AAM to revolutionise passenger and transport movements will be a feature of our skies within the next decade. “I do think we’ll see a significant number of them flying around and hopefully you know accessible to everyone and so my vision would be by the mid-2030s, late 2030s this is something that will deliver your groceries and that will move medical supplies around but also you and your commute potentially. Maybe not every day, but if you go to the office once or twice a week, go on a business trip or visit that one friend across town you can take this as a mode. Hopefully that’s what we get to and the industry is working hard on figuring out how to do that without creating all kinds of externalities like noise etc and we’ll see where that ends.”