Market master
By Paul Brinkmann|June 2023
Robin Riedel, partner at McKinsey and Co.
Over the course of his career, Robin Riedel has gone from flying aircraft to studying those who aspire to build and operate them. A commercial airline pilot turned analyst, Riedel researches transportation trends as a partner in the McKinsey analysis firm, which has offices in 72 countries and clients from governments, industry and the investment community. Of late, Riedel has been largely focused on the emerging advanced air mobility market of electric aircraft for passenger and cargo transport, a sector whose products and services could reach a total value of $300 billion to $500 billion by 2040, according to McKinsey. How fast can the industry get there? Riedel offered me a prediction about the initial services and described the many obstacles that must be crossed for wide adoption of passenger services. I reached him at his home office near San Francisco. Here is our conversation, compressed and lightly edited.
Q: Many electric air taxi developers envision receiving aircraft type certificates from FAA by 2024 or 2025. Tell us how such projections are panning out. Will we see commercial service soon?
A: I’m still bullish that we will see limited commercial service by the middle of the decade — so that could be ’24, that could be ’25 — meaning a certified aircraft that can be used for some kind of commercial mission. That doesn’t mean we’re going to scale up to mass production quickly. We’ll need to see several iterations of aircraft, evolution of designs, before we reach mass production. We’ll also need to see broader regulatory changes, the public embracing this as a new service, and development of public ground infrastructure. So, in the next few years, we will likely see one or two routes in a couple of cities. But that is still more of an initial test run than what you would call a mature, at-scale operation.
Q: What do you see as the biggest obstacles to starting commercial operations?
A: There are four major challenges. First is public acceptance. The public needs to be engaged and supportive of regulations allowing these aircraft to fly in their neighborhoods or downtown or wherever so that people understand why these aircraft are helpful, why they are not dangerous. Second is the development of regulations. Regulators have very much been helpful to the industry so far in creating pathways to get vehicles certified. But now we also need the details on how operations and pilots can be certified, and there is regulatory uncertainty around those questions still. Third is the technology itself. We are seeing electric aircraft flying now, but things like batteries and power management systems still need to advance to get to a wider, commercial scale. It is not necessarily science but engineering at this point. Fourth is really about funding and support for the industry. It’s been quite fortunate in the way that it got funding and the support of the aerospace and automotive industries, but that needs to continue. Very few of the players out there today have enough funding to really get all the way to full commercial operations.
Q: Do you anticipate that some AAM players will drop out or close soon?
A: There are probably going to be a few players who cannot continue at some point, and that might take the form of them just shutting down. It might also take the form of merging with others or selling their technology. I wouldn’t be surprised at all if we see a few players discontinuing this year and a few more next year.
Q: Is the goal of widespread air taxi service by 2030 still realistic?
A: By the end of this decade, we’ll see a few markets in the world where we will see something that starts resembling full scale, meaning dozens of aircraft flights throughout the day. You could see a couple of the leading cities or rural areas that really kind of see the benefit of this. Maybe there’s an airport route; maybe there’s a route from the suburbs to a city center. But we’re still going to be far away from the skies being constantly blackened by vehicles in the air.
Q: What’s likely to happen first: regional service or urban service?
A: There’s definitely a market for urban air mobility — eVTOLs [electric vertical takeoff and landing aircraft] flying shorter ranges, say up to 50 miles [80.5 kilometers]. Regional service, at hundreds of miles, will be the purview of extremely short takeoff and landing aircraft or aircraft powered by hydrogen fuel cells. And then there’s cargo and drone delivery, which is related. I think all of these have their own potential in their own timeline, but I do think the timeline for regional air mobility is, in a way, maybe a little sooner. That’s because regional mobility can leverage runways and regional airports that we already have today.
Q: How realistic are goals to fly passengers on mostly autonomous aircraft without a pilot on board?
A: It’s important to define what we mean by autonomous. Is it autonomous, or is it a highly augmented aircraft that is much easier to fly? I do believe that on the cargo side, autonomy is going to start very early on. The U.S. military, for example, already flies multiple 100-pound-heavy [45 kilograms] drones high over our heads all the time. And you know, none of us really are bothered by that. But if you have unpiloted craft zipping around [neighborhoods], there’s a bigger hurdle. For passengers, remotely piloted aircraft will take more time. I know some operators claim they can be ready for that in a few years, because it could be more cost-efficient. But it does raise questions around certification and regulation that you just don’t have when you have a pilot, because piloted aircraft can use existing regulations. But I think we will see more autonomy by the end of the decade. One interesting thing to note, though, is that, historically, aviation has been very concerned about the people on board of the aircraft, right? And less so about the collateral damage on the ground because it hasn’t been a big problem. Now, as we’re starting to fly in urban environments more frequently, that might become a bigger focus and require some rethinking on the regulatory side as well, in terms of how we think about risk.
Q: On the topic of batteries, are we seeing the needed breakthroughs?
A: Even if all these electric aircraft plans are successful, it will still be only a fraction of the electric automobiles that are projected to be built. We’re going to be in competition with the automotive manufacturers that want some of the same raw materials. And so that’s going to get reflected in the price of manufacturing these vehicles.
Q: There’s a lot of effort to miniaturize components and reduce weight for electric aircraft. How is that coming together?
A: We’re fighting gravity all the time. But the AAM industry is helping us fund a lot of research and bring new materials and products to market, so it’s really helped to accelerate innovation in aviation.
Q: Regarding workforce, will air taxi operators planning on piloted aircraft be able to recruit enough pilots?
A: It could be quite a lot of pilots when we’re already short pilots for major aviation, but there are some promising developments. For one thing, if most of these air taxi flights are shorter trips, that means you can be a pilot and still go home to your family every night. That opens up the recruiting to a lot more people. If we do get to the point where we are just monitoring highly automated aircraft, that could bring the cost of pilot training down. We can hope those trends also bring in more diversity, because right now these companies look very similar to the U.S. industry in general, with only about 15-17% of executives being female.
A 2022 workforce survey conducted by AIAA and the Aerospace Industries Association found that 30% of executives in the aerospace and defense industries were women. — PB
Q: I’ve frequently heard AAM executives and experts in congressional hearings warning that if FAA doesn’t certify these aircraft soon, China or another country might emerge first in advanced air mobility. Is FAA under too much pressure?
A: I don’t see the FAA disproportionately focusing on competition. The U.S. has a long tradition in aerospace, and so does Europe or the U.K., by the way. But the government is trying to find the right balance between furthering commerce while maintaining safety right now. The FAA’s mandate is focused on safety, so I’m pretty sure they’re not getting overly swayed by these considerations.
Q: What do you make of the trend of AAM companies hiring former FAA staffers or government employees?
A: There’s been a lot of hiring from FAA and from NASA to support these new companies, but I don’t know what the history is or whether there’s been an increase. At the end of the day, the agencies and the companies need good talent, and they’re in a war for talent to find the best people out there. But it hasn’t really hurt the agencies. I think they still have access to amazing talent, so it has not turned into a talent shortage or talent crisis yet.
Related Topics
Advanced air mobility
