29 September 2023
Advanced Air Mobility
New technologies are advancing the aviation landscape, with leading advanced air mobility (AAM) companies pressing on toward a common goal: entry into service.
The 2020s are due to go down in aviation history as a period of accelerated innovation, as visionary companies within the Advanced Air Mobility sector race to certify their aircraft. As is often the case with emerging technology, a host of acronyms have arrived to help make sense of the complex ecosystem. AAM has been widely welcomed as the umbrella term, describing technologies and infrastructure relating to innovative new aircraft, from smaller unmanned systems to passenger-carrying eVTOLs and larger fixed-wing electric, hybrid and hydrogen commuter aircraft.
The early days of Advanced Air Mobility were marked by sleek investor decks and renders of aircraft that appeared extra-terrestrial, but the material progress in recent years is self-evident. Today many functional test aircraft fly regularly, some of which have accrued 1,000s of hours and are in their fifth or sixth generation of development. Infrastructure needs are attracting more attention, and regulators are unwavering in maintaining safety as the top priority in all certification efforts.
Urban vs Regional Applications
In 2023 Urban Air Mobility has continued to draw wide interest, with the promise of electric vertical take-off and landing passenger services opening new pathways in the skies above congested cities. Eyes are on the Paris Olympics next year where the first UAM operation of its kind is set to take to the skies in defined flight corridors.
Alongside UAM, the Regional Air Mobility segment is active, with a focus on realising the environmental, operational and cost benefits of next-generation aircraft on regional routes. Some expect scaled RAM operations to precede UAM, given the infrastructure and airspace integration challenges associated with more urban and metropolitan operations.
Pre-Order Book Continues to Grow
Orders for eVTOL and other AAM aircraft have continued to be announced throughout 2023, putting the estimated total global order book at over 13,000 units in Q3. Buyers represent a diverse range of operators and business models, choosing suitable aircraft to serve one or more of the core use cases:
• Air taxi (urban/metropolitan)
• Regional
• Cargo
• EMS/medevac
• Military / Defence
Evolving Risk Landscape
The basic physics of flight of course remain unchanged, but the evolving risk landscape may present challenges for insurers.
Novel Aircraft Designs
AAM manufacturers have chosen a variety of different design configurations, the detail of which is expected to be relevant to the risk profile.
• Fixed multicopter configurations have multiple motors on the horizontal plane, with the whole aircraft tilting to achieve forward flight. Mission duration is relatively short.
• Lift+cruise designs have dedicated propulsion systems for vertical takeoff, handing over to separate systems for forward flight. This allows for the motors and propellers to be optimised for each phase of flight.
• Tilt rotor aircraft are capable of vertical takeoff, then entering into a transition phase where the actuated motors tilt forward.
• Vectored thrust approaches involve multiple variable-direction ducted fans that can be tilted to control the aircraft, both in vertical takeoff and during cruise.
• eCTOL aircraft generally look similar to fixed-wing aircraft but utilise electric, hybrid or hydrogen propulsion systems as well as integrating other advanced technologies.
Despite what appear to be divergent aircraft design decisions, there are fundamental similarities. Most aircraft have composite hulls, electric motors, batteries, multiple redundancy systems and a highly digital cockpit environment.
Increased Autonomy
Some companies have placed their bets on full autonomy from the start, with confidence in developing sophisticated flight control systems and hoping to reap the commercial benefit of not having to pay a pilot. However, fully autonomous aircraft are more difficult to certify and are particularly challenging to integrate into the existing airspace infrastructure, hence the decision of many AAM manufacturers to include a pilot seat, at least initially.
Consolidated Supply Chain: Vertically Integrated Business Models
A further challenge for insurers may be the move toward vertically integrated AAM companies, where the manufacturer is also the operator. The liability implications could be significant as more exposure is retained under one roof compared with traditional operators sitting in front of a multi-varied supply chain. With some manufacturers designing and building critical components in-house, the implications on liability exposure will be a focus for insurers.
Insurance as a Catalyst for AAM
As AAM aircraft approach certification and entry-into-service, the availability of insurance will become an increasingly critical factor. However, the good news is that the value of the insurance market to the AAM industry goes further than the provision of insurance capacity.
Early success of AAM is heavily dependent on public acceptance, relying on the confidence of the first passengers to step inside the cabin. This leads to hyper-sensitivity to accidents, which are quickly picked up by national media, even in un-crewed pre-production test flights. Therefore, efforts to reduce risk early on are hugely valuable, and insurers are uniquely positioned to help. Sitting in the middle of global industry and benefitting from a wide-angle lens, the market can identify risk trends early as they emerge across the global scope of AAM activity, empowering AAM companies to reduce risk of accidents that could damage public confidence. The AAM community will therefore benefit from an open collaborative approach so that the insurance market can harness the power of data and maintain agility in a fast-evolving and complex risk landscape.
Mike Hansen, Head of Aerospace at Convex, said: “Tackling the enormous challenges of sustainability and safety in aviation are among the greatest responsibilities of the insurance market. It will take a data-driven approach to underwrite the risk from the ground up with coverages tailored for the needs of the AAM ecosystem.”
In summary, the AAM industry brings some novel challenges, but with a proactive approach to evolving risk and a collaborative approach to data, the insurance market is well-positioned to be a supportive catalyst for what is projected to be a century-defining industry.
The Walbrook Building 25 Walbrook London, EC4N 8AW
Author
Alistair Blundy
Chief Executive Officer
SkyRisks
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.