European air taxi regulation could come in 2023

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Air taxis will revolutionise urban transport worldwide. Drone transport could become commonplace in many places in the next decade. The first vehicles will only carry luggage, but from then on there will be no stopping them – we could be travelling in flying taxis by the end of the decade. But how ready are different countries and regions to launch this service? This is the question that KPMG’s Aviation 2030 Air Taxi Readiness Index, which assesses the readiness of individual countries around four pillars, has set out to answer.

Commuters and tourists alike are looking for new ways to shorten journey times in congested cities, and the market for vehicles that can pick up and drop off passengers from a given location is set to take a significant leap in the coming decades.

Market analysts expect the sector to grow relatively quickly. Morgan Stanley estimates that this market could grow to one trillion dollars by 2040. The sector is experiencing a ‘gold rush’ of start-up and investor interest, fuelled by futuristic demonstrations and breathtaking reports. Development is at the finishing line, with several operators planning to bring prototypes to market within three years.

But investor interest now risks a bubble. Morgan Stanley’s estimate of one trillion dollars is also a significant drop from its original forecast of one and a half trillion dollars in 2018. The bank’s analysts say the technology has yet to climb the Mount Everest of regulation, and there are also plenty of risks in the speed of adoption. “This suggests that investors should expect a payback period of 20-30 years, but by 2050 even the most pessimistic analysts are predicting a multi-trillion dollar market globally”. Different regions may approach regulation differently, so, as with automotive regulation, investors will have to contend with local factors (e.g. the EU is likely to have stricter regulation) in addition to global headlines.

Where will success come from ?

In some countries and regions, of course, there is more realistic prospect than in others that the service will be up and running in the next few years. The KPMG Aviation 2030 Air Taxi Readiness Index sought to assess the readiness of 25 countries for the use of passenger vehicles capable of taking off and landing from a location. The index combines 34 stand-alone metrics, grouped around four themes – customer acceptance, infrastructure, regulation, and technology and innovation.

The United States leads, with the Netherlands first in Europe

The United States tops the research ranking by a considerable margin – unsurprisingly, it is in the top half of the list in all metrics. The US has the highest air traffic of all the countries surveyed, indicating a high demand for air travel, and also a highly developed air traffic control infrastructure – which together can provide a solid base for vehicles capable of taking off and landing from a location. Singapore is second on the list. Challenges for further development include congested airspace, a tropical climate and a densely populated urban environment. However, this is offset by open and progressive regulation and a government that is fully open to the introduction of new technologies and encourages their use. The Netherlands was the first European country to be ranked third. Here regulation is expected to be implemented at EU level.

The UK is fourth in the ranking because the country’s vibrant aviation start-up community can build on a strong aerospace and defence tradition.

Drone taxi stations on rooftops?

Regardless of the exact timetable, air taxis are likely to revolutionise urban transport around the world in the coming decades, but some countries are more prepared than others. The KPMG Aviation 2030 Air Taxi Readiness Index also identifies some aspects to be considered by stakeholders and some expected trends.

Manufacturers and supply chains
Traditional aviation manufacturing companies are facing new challengers, such as well-funded start-ups, technology companies and car manufacturers, among others. Consolidation is also forecast in this market in the longer term.

Infrastructure, logistics
Regulatory requirements are expected to limit the use of air taxis in urban environments, and mass deployment will require the development of a large number of landing sites. This will create opportunities for existing infrastructure operators (airports, bus terminals, railway stations) to cooperate with the air taxi industry. Infrastructure in key locations, such as car parks, is also expected to be converted into landing facilities, and future property developments may see increased interest in landing facilities on the roofs of new buildings.

Air taxis will be small enough that it will not be practical to carry heavier baggage, and integrated baggage services are expected to be introduced – for example, passengers can drop off their baggage at a local shop or post office before departure and collect it at their destination after arrival.

National rules
Investment in the air taxi industry is expected to generate significant economic growth in the service area. However, policy makers will need to consider whether to take advantage of the economic opportunities offered by rapid deployment or, learning from the initial mistakes of others, proceed more cautiously and take the safer route.

While surface rail and road network upgrades have significant costs, with air taxi only the cost of creating the conditions for landing and take-off at the terminals is significant. This is a huge opportunity for urban mobility planners, as it allows new areas to be brought into service more quickly to meet the expansion needs of a region. Cooperation between surface transport companies and aviation manufacturers is likely to be needed to bridge the gap between urban and air transport.

Air traffic management and regulation
Regulatory action is becoming increasingly urgent in many markets. Early regulation is also essential to ensure that ill-conceived measures do not deter the public or have a negative impact on public confidence – for example, people do not think that drone taxis could fall on their heads at any time, or interfere with their leisure time. This will require the development of frameworks to deal with noise and priority rules. Rules must be put in place to ensure the highest possible level of safety for users of ‘flying cars’ and for everyone else.

Local authorities, airports, public transport
Existing airports should be prepared to accommodate the significant air taxi capacity expected. This should be taken into account when designing new terminals. While some city centre landing points are expected to be able to handle passenger boarding for international flights, other airports will still need to have security checks before full boarding.

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