Industries are waking up worldwide from doldrum as the COVID-19 has weakened to become endemic *. One of the briskest industries is tourism industry. Of course, there are two sides to a coin. Rise in traffic is shifting the urban traffic congestion forgotten for the past two years to a pre-pandemic level. In addition, as ESG has become one of the hottest global buzzwords, interest in the environmental agenda is on the rise. Against this backdrop, UAM (urban air mobility) is emerging as one solution to traffic issues and environmental challenges, and we present the underlying reason in the following.
* Endemic: COVID-19 is turning into an endemic disease that is addressable by human immunity, low in fatality rate, and treatable.
Industrial landscape reshaped by pandemic/endemic
The COVID-19 pandemic dealt the hardest blow to the tourism industry. Mobility was restricted not only across but also within national borders, and prevalence of online encounters in daily life took an enormous toll on restaurants, liquor establishments, and the shopping industry as well.
The ratio of tourism industry to all industries in terms of gross sales revenue fell from 12.5% in 2019 to 11.5% in 2020 when the COVID-19 pandemic took off. Gross tourism revenue in 2020 dropped by 8.0% when compared with 2019, a rate as much as 7.3 times greater than 1.1% of the combined industries. COVID-19 had greater repercussion on the tourism industry than on any other industries.
However, as COVID-19 is turning into an endemic, the tourism industry is rebounding fast, and alleviation of requirements on offline encounters has raised interest in mobility service to a level higher than ever.
As COVID-19 spread, the fates of industries criss-crossed in a K-shape. As online activities increased, software, e-Commerce, courier services, and online video services grew rapidly along the upward line in alphabet “K” whereas aviation, travel, cinema, and traditional retail businesses declined along the downward line.
The automotive industry had a tough time too. In 2021, 81.2 million passenger cars and light trucks were shipped worldwide, which represents a return to the 80 million level at 5% growth rate from 77.8 million vehicles sold in 2020 when the industry was hit hard by COVID-19. Yet, the level is still 10% down from 90.2 million vehicles sold in 2019 before the onset of COVID-19, and quite a lot of time is expected to pass before automotive chip availability issues and supply chain setbacks are resolved to pre-COVID-19 level.
However, interest and investment in the UAM industry has noticeably jumped. The US Federal Aviation Administration (FAA) defines UAM as a safe and efficient aviation transportation system that will use highly automated aircrafts that will operate and transport passengers or cargo at lower altitudes within urban and suburban areas. The Korean Ministry of Land, Infrastructure, and Transport (MLIT) specifies UAM as a device operating at low altitudes from 300 to 600m and included in MaaS (Mobility as a Service) domain that combines public transportation, railroad, taxi, and personal mobility.
Investments in UAM which is a relatively new mobility solution picked up in 2017. According to a report from Lufthansa Innovation Hub*, 1.25 billion dollars (1.54 trillion won) was invested in UAM in 2020 worldwide. Investments soared as much as 4.7 times in 2021 to hit 5.86 billion dollars (7.2 trillion won). Interest and investment in UAM rapidly increased for two reasons after the COVID-19 outbreak unlike other mobility industries.
* Mobility research organization affiliated with the German Lufthansa Group
UAM draws attention for its remarkable contribution to resolving urban traffic and carbon emission issues
The first reason is the fast rise of the urbanization ratio. The urbanization ratio is defined as the ratio of urban residents to the entire population, namely, the ratio of urban population. According to the UN Department of Economic and Social Affairs, the urbanization ratio is 56.2% on global average and 81.4% in Korea as of 2020. As Korea’s urbanization ratio is higher than the global average, Korea’s outlook is not the brightest.
The global urbanization ratio in 2050 is forecasted to jump 2.3 times to 68.4% from 29.6% in 1950 a century ago, and mega cities having over 10 million population will increase to 43 in 2030 from 33 in 20 countries in 2018 at an alarming rate of urbanization. In particular, as COVID-19 turned into an endemic, urban traffic is expected to rise gradually in a variety of forms including intra-urban traffic, traffic from urban centers to airports for overseas travel, and demands for domestic tourism.
UAM using eVTOL (electric vertical takeoff and landing) aircrafts that do not need long runways and can travel by air are more accessible and less regulated than roads in cities constantly saturated and less friendly to mobility is a new mobility solution that can adapt to rising social costs like cost of congestion and urban problems.
The second reason is the attainment of Net Zero. To achieve Net Zero by 2050, countries around the world are planning to halt distribution and registration of new internal combustion engine-powered vehicles, and the aviation industry is not free from such a trend. Although the aviation industry emits just 2.5% of the combined global CO2 emissions, airplanes get so much more attention than internal combustion engine-powered vehicles in terms of carbon footprint reduction that in Sweden, Flygskam (flight shame) social movement is being waged in the private sector.
When UAM powered by eco-friendly energy sources such as electricity is popularized, it can contribute to reduce social costs by resolving urban transportation challenges (cost of congestion in terms of time delayed by traffic jam) and boosting carbon emissions reduction.
UAM system that can function as a mobility hub
In particular, when urban vertiports* are utilized as mobility hubs for public transportation, personal mobility, and autonomous driving vehicles, they can evolve into a full mobility services base, expanding the spatial coverage of MaaS services that previously consisted of land-based transportation modes. Less urban travel time and alleviation of traffic jam are not all of the strengths that can be found in UAM. If UAM can support short-distance inter-city travel, users can benefit from more convenient and speedier parking, security, and travel routines than when they need to travel via regular airports. Furthermore, many local governments can expect UAM to stimulate domestic tourism demand by offering new travel experiences.
* Vertiport: UAM takeoff/landing port
As described above, UAM ecosystems can contribute to reduce carbon footprints and stimulate local economy with vertiports, introducing a new mode of travel and source of energy and thereby enabling configuration of more dense urban transport networks. SK telecom, an affiliate of SK Group, plans a pilot test of UAM vehicles produced by the US Joby Aviation, and the Korean government places high expectation on its commercial service slated for 2025.
By. Cha Doo-Won | CHA Mobility Research Institute CEO
This content has been created on the basis of the contents in SK telecom NEWS ROOM.
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