On The Radar
Making predictions and rankings in almost any aspect of human endeavor is not necessarily an assured path to winning friends, but it certainly can be a way to influence people. As the maddeningly unpredictable year of 2020 drew to a close, SMG Consulting demonstrated the fortitude to attempt both with the unveiling of its new Advanced Air Mobility Reality Index (ARI) and its Top Five Predictions list for the industry in 2021.
The ARI is a rating tool that Arizona-based SMG is using to assess the prospects of the companies trying to certify aircraft and bring them to market in large numbers. The consulting firm uses a proprietary formula to assess publicly available information about the new programs, assessing five key elements: the funding a company has, the caliber of its leadership team, the technological readiness of each vehicle, progress achieved towards type certification, and readiness to begin full-scale production.
From this, SMG comes up with an ARI index. It launched the index with a ranking of 14 companies. The top-rated one, China’s EHang, has a score of 7.9, while at the other end of the scale there is Germany’s Lilium with 5.5. See for yourself whether you agree with the full breakdown, which will be periodically reassessed.
“Of course, there is a lot of hyperbole in the AAM sector, and the information on many of these new aircraft changes quite rapidly at this stage, so the rankings are not static,” SMG founder Sergio Cecutta told FutureFlight. “We pay a lot of attention to the experience of the teams [behind each program].” The former Honeywell and Danaher executive, who has a Ph.D. in aerospace engineering, formed the company in 2012 mainly to support companies in the aerospace, defense, clean technology, and automotive sectors.
But is it realistic to be able to rank the full array of advanced air mobility contenders, with the Vertical Flight Society listing around 400 programs from 250 or so companies? “The long tail [of companies] will naturally go away as it becomes clear that they can’t cover their costs and their business cases might not payout,” Cecutta commented. “With the Reality Index, we’re looking at the cream of the crop. So far no one has objected to who was there [in the rankings], but only over the relative positions.”
In Cecutta's view, 2021 won’t be the year that sees a major wave of consolidation in the sector through mergers and acquisitions. “Many of these companies are still in start-up mode,” he said. “They think they have a better solution than the others so they don’t see themselves being acquired. The larger companies [such as the big aerospace groups] might want to get involved in mergers and acquisitions but I don’t see it happening in 2021 because they are still having to get their house in order after Covid.”
SMG sees an increasing amount of overlap between advanced air mobility and the automotive world where a focus on autonomous and electric vehicles is pushing the large manufacturers to look for opportunities in other markets. “The [advanced air mobility] sector is still finding new sources of money, such as from automobile companies that are very interested because they are facing so much disruption in the car market, which is set to reach ‘peak car’ in the next 10 years,” Cecutta reflected.
The SMG team also came up with a Top Five list of predictions for this industry in 2021. On balance, FutureFlight concurs with all of the following:
- Beta Technologies' Alia aircraft will achieve military airworthiness.
- Flight testing will be ramped up for the NASA Advanced Air Mobility National Campaign and the U.S. Air Force’s Agility Prime programs.
- The EHang 216 aircraft will be certified by the Civil Aviation Administration of China (making it the first AAM manufacturer in the world to achieve this milestone)
- EASA will finalize and publish certification regulations to cover eVTOL aircraft.
- Full-scale prototypes of eSTOL aircraft will achieve first flights.
Reflecting on his prediction about the Agility Prime program, Cecutta acknowledged that this is potentially hostage to political fortunes, in view of this week’s change in U.S. administration and the departure of Dr. Will Roper, the Assistant Secretary of the Air Force for Acquisition, Technology, and Logistics. He has personally championed Agility Prime’s proactive engagement with the advanced air mobility pioneers, raising some concern that it may lose momentum with him gone. “But, really, I hope that the Agility Prime ship is now far out at sea,” commented Cecutta, indicating that it may therefore be able to continue on its course towards the goal of making new eVTOL aircraft available to support military applications.
Looking to a point, likely in the second half of this decade, when the first eVTOL aircraft enter service, Cecutta says it appears that most of the companies developing them are intent on operating them as well, even though few have experience with commercial air transport. “I suppose the rationale for this is that the vehicles are so new the companies want to be in control of the rollout and they want to control any kinks,” concluded Cecutta. “Every company thinks they have a clear advantage over the others so they don’t want to sell their aircraft to anyone else. And that could create a hurdle for profitability, especially as it could take $3 billion to $4 billion to get the aircraft into service.”