Building an Economic Ecosystem for Urban Air Mobility
Every day, millions of hours are wasted on the road worldwide. The average San Francisco resident spends 230 hours annually commuting between work and home ?that works out to half a million hours of productivity lost every single day. In Los Angeles and Sydney, residents spend seven “working weeks” each year commuting, two of which are wasted unproductively stuck in gridlock. In many global megacities, the problem is even more severe; for example, the average commute in Mumbai exceeds 90 minutes. For all of us, that’s less time with family, less time at work growing our economies, more money spent on fuel?and a marked increase in our stress levels. A study in the American Journal of Preventative Medicine, for example, found that those who commute more than 10 miles were at increased odds of elevated blood pressure. In many U. S. cities including Seattle, San Jose, Los Angeles, Dallas, Houston, Chicago, and New York, commutes have become an enormous economic drain and cause of personal stress.
In a 2015 research paper, a NASA scientist named Mark Harmon concluded that this “commute time” could be reduced dramatically using air vehicles that flew over traffic. And, his vision fit well with the ride-sharing “demand model” pioneered by Uber and Lyft.
This immediately resonated with the Trends editors. Over 30 years ago, they identified the idea of Personal Air Vehicles, also known as “flying cars,” as a compelling solution that would evolve into a game-changing industry. The challenge was to create an economically viable business model by harnessing a suite of evolving digital technologies. Like the Trends editors, top management at Uber, immediately saw the enormous transformational potential embodied in Harmon’s concept.
So, Uber hired Harmon and created a business unit called Uber Elevate to address the opportunity. At the same time, a German company called Lillium has launched its own effort also based on the ride-sharing model.
The monumental challenge Uber and Lillium both face can be summarized as “delivering a safe, cost-effective, reliable, and quiet aerial commuting solution using technologies and infrastructure that are available in the near-term.” Overcoming this challenge this involves an amazing number of “chicken and egg” dilemmas that can be boiled down to one harsh reality: “No one is willing to invest the capital and manpower needed to create the regulatory, infrastructure, vehicular, energy delivery, and marketing assets needed for this new industry, unless there is a high probability that the other necessary components will be in place to make the complete system economically viable.” That means that all parts of the complex ecosystem needed for success, have to be put in place on day-one.
On this basis, Uber Elevate took on the role of “ecosystem hub,” with the mission of defining the industry roles and standards which Uber and other companies will fill based on their core competencies. The idea is to have a variety of air vehicles operating from standardized vertiports, or “Skyports,” and providing a standardized interface to end-users.
To enable this, the ecosystem will harness a wide range of technologies evolving in other contexts that can be applied to this industry. These range from sensor networks, to high-density quick-charge batteries, to ultralightweight composites.
Today, the main challenge facing Uber Elevate is to help a wide range of partners to create solutions that fit seamlessly into the broader industry framework and to develop standards that will enable companies to focus on delivering real-world solutions to tough problems quickly, with minimal trial and error.
A range of business partners are taking charge of all the roles under the headings:
- Aircraft Management,
- Pilot Management,
- Skyport Management,
- Power & Electric Management,
- Skyport Operations, and
- Communications Infrastructure Management.
In addition to building the digital platform for the system, called Elevate Cloud Services, Uber’s primary function will be helping its partners fill the many ecosystem roles by helping them work with regulators and each other.
Uber’s third important role is to take the lead in the development and manufacture of batteries and battery management systems optimized for the Urban Air Mobility market. For this purpose, Uber recently hired Tesla’s top battery design and manufacturing executive to create battery systems that are as cost-effective as possible for the rapid charge/discharge environment of electric-VTOL aircraft. Why? Because the reliability, energy density, and energy transfer demands of electric-VTOL aircraft are dramatically greater than those of the nearest analog, which is electric cars.
The second annual Uber Elevate Conference held in Los Angeles on May 8 and 9, 2018 gave the Trends editors s chance to see how Uber Elevate is going about resolving its myriad competing challenges. As we learned, it’s best to think of the urban aerial ride-sharing industry as a complex, but solvable, linear programming model. Within this model each set of “constraint equations” represents a specific business challenge.
The first challenge for Uber is determining the “customer-facing characteristics” of the new Uber Elevate system; those are the aspects that determine the “user experience.” They include speed, price, reliability and aesthetics. The two existing models for getting around the city are the helicopter model and the personal car model. Uber assumed that at the cost and speed of today’s helicopter services, which is $8.93 per passenger-mile, the new offering would attract the same number of users as helicopters. Coupling the speed of a helicopters with the cost of a personal automobile, which is $0.49 per passenger-mile, would attract nearly all the people taking trips of 30 minutes or more, who now take automobiles. These two points on the demand-curve form the starting point for more comprehensive analysis that involves determining demand and the kind of network required to satisfy that demand.
The next challenge is to figure out how many people want to go from point A to point B during each hour of each week of the year. It starts with a few underlying assumptions, such as:
1. People will want to go to the same places they go now.
2. They’ll desire the same arrival times.
3. They might want to go to additional places if they could get there in a fraction of the time it now takes.
4. The new generation of urban aerial vehicles will move at the speed of today’s helicopters or faster.
5. People are willing to adopt the new solution if it provides a much quicker door-to-door travel time. And,
6. People will use conventional ground transportation (like walking or taking an Uber car) to a departure vertiport and from the destination vertiport to their final destination.
Given these and other reasonable assumptions, Uber is combining official traffic data with Uber’s own experience, to determine exactly where vertiports would be optimally located.
The second challenge, described by another set of equations, involves determining the full costs of flying each passenger. These costs involve the ground transportation we mentioned earlier, as well the costs of energy, vertiport operations, aircraft operations, and system overhead. Vertiports of specific sizes have projectable fixed and variable operating costs. The aircraft costs will include fixed costs, such as acquisition, as well as the variable costs of energy used, maintenance, and pilots, if any. There is also the cost of the administrative and systems overhead.
The actual cost per passenger-mile depends on the utilization rate. And this transportation system will only become a profitable business, once the average total revenue per passenger-mile exceeds the average total cost per passenger-mile. That means utilization rates are critical.
Variable pricing algorithms like those already in use by Uber will help match demand to capacity constrained by available aircraft and vertiports. In other words, peak prices at peak volumes will prevent excess wait times during “rush hour,” while bargain pricing in the middle of the night will keep the system “busy” 24/7. And, of course, off-peak periods will permits idle vehicles to undergo the maintenance that ensures airline-like safety.
An additional challenge is to fine-tune the placement of vertiports based on utilization management. That is, determining how many vehicles each vertiport location needs in order to provide targeted service-levels within a given time interval. Obviously, the number and types of vertiports, constrained by a combination of geography, technology and regulation will influence what can be delivered and what the pricing will look like.
Notably, the vertiport constraints are playing a major role in defining Uber’s targeted aircraft configurations. For instance, one early decision Uber had to make was whether their network would support internal combustion, hybrid-electric, and/or electric-only aircraft. They chose to exclusively support electric-only aircraft for six vertiport-driven reasons:
1. City fire codes make storage and handling of the liquid fuels needed for internal combustion engines or fuel cells prohibitively expensive in elevated vertiport sites.
2. Non-vertiport refueling would unacceptably lower utilization because of the time required for the empty aircraft to travel back and forth to a refueling site.
3. The danger of onboard fire due to the liquid fuels needed for internal combustion engines or fuel cells represents a much higher risk than battery fires.
4. Meeting required noise targets with existing internal combustion engines would be very difficult. Helicopters average 85 dB at 500 feet, Uber is targeting 70 dB.
5. Electric VTOL vehicles using today’s state-of-the-art battery technology can already meet the weight and recharging targets necessary to achieve high utilization and light weight. Uber has initiated a program to provide a solution for its partners that achieves 300 Wh/kg at the pack level, while state-of the-art is now roughly 200 Wh/kg. And,
6. Vertiports in most locations can readily access electrical capacity needed for during a 10-minute unloading/reloading cycle; and this will only improve as electrical infrastructure and battery technology evolves.
Another challenge is the unprecedently precision requirements placed on the new Air Traffic Management system. Today’s air traffic control system is designed for conventional airplanes with landing and take-offs at traditional airports. Aside from airports, the airspace in which commuter helicopters operate today is essentially low density and uncontrolled. Transponders tell other aircraft the locations of these aircraft, and the small number of aircraft can maintain wide separations. But, in the new world of aerial ride-sharing, thousands of aircraft will operate within Dallas, California’s Bay Area, or Los Angeles, converging on scores of vertiports. Uber plans to work with the FAA and its partners to develop a system that keeps these thousands of aircraft safely separated and timed for reliable arrival and departure.
Based on what Uber already knows about ride-sharing from its existing business, it can readily predict the arrival of passengers at the departure vertiport and their departures from the arrival vertiport. To achieve maximum utilization, recharging takes place when the aircraft is on the ground and passengers are unloading and reloading.
To enable very fast recharging, Uber is working with automotive recharging experts at Charge Point. Charge Point has developed a special recharging unit that plugs into a proposed industry-standard adapter that could be mandated for all Uber Elevate aircraft. The interface delivers 2000 amperes at 800 volts via four parallel streams. It also downloads data collected by the vehicle, supports a diagnostic data interface and delivers one liter per second of chilled water to cool the battery systems during high-speed charge.
A key factor enabling rapid take-off and landing at the vertiports is the Air Traffic Management system alluded to earlier. Working with the FAA and other entities, Uber is helping to develop a new kind of ultraprecise Air Traffic Control system for local flights at altitudes of up to 4000 feet. Under such a system, every vehicle would continuously report its exact position, velocity and altitude to every other aircraft and to a centralized control system.
To make optimal use of the Air Traffic Management system, Uber’s longer-term objective is the eliminate human pilots. So, the Pilot Management roles identified earlier, represent a temporary stop-gap that will eventually be phased out as autonomous operation is certified by the FAA.
To this end, it has teamed up with Aurora Flight Systems, a subsidiary of Boeing. This will eliminate the element of “human error,” increase the revenue-generating payload, and eliminate the salary costs of the pilot. And while this system is likely to be fully functional by 2023, The FAA may take much longer to permit it to fully replace human pilots. As creator of the eco-system, Uber has taken it upon itself to work with the FAA and other regulatory agencies to put in place a set of regulatory certification processes for the Air Traffic Management system, the Electric-Vertical Take-off & Landing aircraft, and the Vertiports, as well as batteries and recharging systems. Uber estimates that freeing up a seat in the vehicle and eliminating pilot-related costs will enable total costs to fall from $0.75 per passenger-mile to a final target of $0.44 per passenger-mile.
To date, Uber has designated 5 aircraft business partners: Aurora Karem, Pipistrol, Embraer, and Bell.
Boeing’s Aurora subsidiary is listed as an aircraft partner. Aurora has created an electric-VTOL protype using 24 highly redundant fans; a type of design favored by Germany’s Lillium. The protype called Lightning Strike has already completed tests for DARPA and the U.S. Air Force, which are evaluating its usefulness. However, Aurora’s Partnership with Uber is primarily focusing on creating the standardized “robot pilot” to be used across all Uber-compliant aircraft.
Embraer and Bell are naturals for this space because they make a wide range of aircraft. Bell has been a leader in VTOL technology since the advent of helicopters, while Embraer has successfully fought its way into a very strong position in both the business and commuter jet markets.
Karem and Pipistrol are pioneering start-up companies with technology expertise that addresses several of Ubers’s biggest aircraft-related challenges. Specifically, Pipistrol is the only company now making and selling electric-powered aircraft in volume; it is also prototyping a VTOL aircraft and working to scale up its manufacturing volume.
The founder of Karem, pioneered the technology General Atomics used to create the Predator drone and the company owns exclusive rights to a new super-efficient, variable-speed rotor technology optimized for tilt-rotor VTOL applications. During the 2018 Uber Elevate Conference, Uber and Karem revealed a protype aircraft, called Butterfly, which can fly 60 miles using today’s state-of the art batteries, while still having enough energy to fly the its required “reserve mission” at the battery’s “end of life” state of 80% of original capacity. That doesn’t mean that Butterfly will necessarily become the dominant design for Uber Elevate, it simply means that there is at least one solution to the aircraft technology challenge that already works.
By harnessing the competencies of a wide range of partners, Uber Elevate is systemically solving the wide range of challenges involved in creating a game-changing platform-business from scratch. This not only represents a viable solution to this specific problem, but reflects a broader trend toward decentralized value creation networks.
Given this trend, we offer the following forecasts for your consideration.
First, Uber Elevate will begin tests in Los Angeles, Dallas and other cities in 2020.
These tests will probably start with as few as two Skyports in each of up to 6 cities. This effort will simply provide a platform for Uber and it’s partners to test hardware, software and standard operating procedures. With development in parallel of several aircraft designs and vertiport configurations, the network will rapidly learn how to meet targets for noise, loading & unloading times, recharging, and Air Traffic Management precision, while working with a very small number of trips without passengers. Because of the limited scale, the status of the technology, and the widespread enthusiasm, we expect this phase to launch by year-end 2020 at the latest.
Second, Uber Elevate will begin limited commercial trials in 2023 or 2024.
Uber and its partners are targeting commercial trials in 2023. By choosing cities with different cultures, it minimizes the risk that it will get bogged down in local politics. At the Uber Elevate 2018 conference, the tone of regulators was encouraging. Assuming no serious accidents happen during the testing phase, limited commercial trials of the system could definitely begin by year-end 2024. This will be the riskiest step as it requires flawless mass-produced aircraft and a real precision air traffic management system to handle a growing population of aircraft.
Third, the standards Uber is imposing upfront on partner technology will go a long way toward ensuring safety.
Its all-electric propulsion standard minimizes failures due to system complexity, as well as the chance of onboard fires or fires in the vertiport. The initial use of onboard pilots will provide human intervention if any systems malfunction. And the requirement that all aircraft come equipped with ballistic parachutes or autorotation capability for emergency situations minimizes the chance that a failure will end in a fatality. The full list of published standards for Uber Elevate is summarized on pages 22 and 23. And,
Fourth, the globally Urban Air Mobility industry could grow to at least $150 billion a year by 2035.
Just as someone in 1908, would have had trouble imagining the vast automobile ecosystem of 1925, it’s hard to imagine an the enormous UAM ecosystem we’re likely to see in just 17 years. If we think back to the companies that composed the personal computer ecosystem in the early 80s, Uber may be seen playing a role much like IBM played, with companies like Microsoft and Intel acting as crucial partners. Companies like Boeing, Bell and Embraer don’t want to be left behind, and companies like Karem, Pipistrol and Charge Point see this as their big opportunity. Perhaps Lillium will be the Apple of the UAM revolution. Only time will tell.
1. Uber Elevate Summit 2018:
2. Kirsten Korosec. Fortune. April 25, 2017. Startup ChargePoint Will Provide the Juice for Uber’s Electric Flying Cars.
3. Kia Kokalitcheva. Fortune. October 27, 2016. Uber Hopes Flying Cars Are the Future of Transportation.
4. The Trends Editors. Trends. November 14, 2015. Urban Mobility Takes Off.
6. The Trends Editors. Trends. September 15, 2016. The Flying Taxi Experience May Be Here Sooner Than Expected.
7. The Trends Editors. Trends. June 24, 2017. On-Demand Personal Aviation Takes Off.