Anshu Vats, global lead, public sector and policy at Oliver Wyman, explains why the GCC and the UAE in particular are positioned to become the global capitals of urban air mobility.
What’s the appetite for urban air mobility in the GCC?
There is more appetite here in the GCC region than anywhere. One thing that sets this region apart is that the mobility landscape is just so different. The geography lends itself to a very different set of demands so you don’t have the pedestrian connectivity you’d expect in London or Paris. When you look at the way the Middle East commercial landscape evolves it’s around CBDs – central business districts. What you see is that there is a pretty significant concentration of business in CBDs still in the Middle East in spite of governments’ efforts to distribute it. As a result the harsh geography and the concentration of economic activity, mass mobility and individual mobility will always remain an unconventional nut to crack in the Middle East.
It’s always going to be a little bit different to how we deal with it in Europe, for example. Middle Eastern cities are hugely focused on transportation rather than pedestrianisation, which is the opposite of most European cities. We are not going to become pedestrian-connected. Yes, we are trying and we should continue trying. The pedestrian element of our living has to increase and Dubai has done a great job. But we will never get to the same point as European cities. It would not be logical. Here we need air mobility, mass mobility, rapid mobility, all the modern modes of mobility to work together to help people commute to economic activity, leisure and pleasure.
What are the kind of stakeholders that are making the GCC and attractive place for investment in UAM?
There has to be a balance in the mobility masterplan. It should include the private sector, financing, infrastructure, legislation, regulation, governance, innovation; all of that needs to come together. In terms of which types of firms are interested in the UAM market, you’ve got all types. The reason for that is because the growth in the region – despite Covid – will remain stronger than other areas in terms of per capita GDP. What you have here is a market that relies on mobility for economic activity, whether its passengers or supply chain. It relies on – very uniquely – multiple forms of mobility.
It’s not just trains or planes or ships. This is one of those regions where about 90% of our imports comes in through the seaports and from there they use land and air transport to distribute it and from there it goes through further modular land transport to get to you. Every aspect, whether economic activity or pure leisure, every aspect of our life is affected by mobility, unlike some other regions. That is a very unique proposition. All of the OEMs, whether it’s Airbus, Boeing, Embraer, all of them see a great opportunity here.
And how about regulators? How far are they facilitating the mobility masterplan?
I think the advantage that we have in the region is not only this wonderful demand that exists and opportunity to integrate multi-modal transportation, but on top of that we are unique in terms of regulation and financing. We have one of the very few regions where patient investment capital exists and that leads to long-term economic impact. There are investors that are willing to put money in for the long-term; that is quite rare at the moment.
And there are the regulators. The veto power of countries in the EU means that getting anything done there is almost impossible. Getting agreement on a common standard is tiresome to say the least. The beauty of the GCC is that we are able to move exceptionally rapidly. If the decision makers decide that a vertical take-off and landing makes a lot of sense then it is being approved as we speak. The decision can be made very quickly. And there are cities that can make those decisions for their own domestic consumption without affecting a major GCC regulation body.
How important is UAM when it comes to creating environmentally sustainable cities? Will it become a necessity rather than a luxury?
I think it’s going to be a necessity beyond the sustainability side. It’s going to be a necessity in terms of economic activity. The reality is that if you look at Dubai’s mobility strategy, it’s a pretty significant commitment to electrification. You see the same things starting to become almost the central part of the value proposition. The tide is turning in the favour of sustainability but the reality is that the UAM sector is answering a much bigger question. How do we stay ahead of the curve? How do we remain attractive? How do we make economic activity more productive?
Can you still see UAM as a realistic point of investment in this region in the wake of the pandemic and the economic shock it has caused?
What you are seeing is that economic activity has declined a little bit because of the drop in consumption but the productivity has gone up because we are doing more with less. That means that we are seeing far more automation and far more economic concentration of activities in very confined sectors. If you’re looking at that significant spike in productivity going forward, UAMs will become a huge part of that. If you’re going to continue at that level of economic activity it’s inevitable that you need more UAM and it will go beyond passenger applications and into supply chains. That will create a whole new demand.
In terms of a timeline, when can we expect to see eVTOLs buzzing over our heads in GCC cities?
My personal assessment is that I think it requires the first city to move and you will very rapidly see an exponential hockey curve style pickup of the whole sector. I think within the next two years, we will see one of the GCC cities, whether it’s one of the greenfield cities in the region or an area such as Dubai South or KIZAD in Abu Dhabi. My sense is that within the next two years we’re going to see a take-up of one of these cities of UAM and the rest will follow rapidly. The national pride element definitely plays a part but I think the biggest challenge you have is the regulation.
Once you have a playbook, a starting point of a regulation, you get to that point of comfort where reliability and cost is concerned, you feel sufficiently comfortable. The problem is not the technology, the problem is sociological. We’re trying to get to the point that as a city, as a regulator, as an economic player, we are comfortable with UAM. Once someone makes a move and you become familiar with what used to be the unknown, building on that becomes a lot easier. The focus at the moment is on passenger vehicles but I think the bigger opportunity lies on the supply chain side, especially in the GCC. So having a little bit more exposure to the supply chain would serve us more, I think.