With the COVID-19 pandemic wreaking havoc in global aviation over the past year and a half, the airport industry has been hit hard. The number of scheduled passengers boarded onto planes dropped from about 9.1 billion to 3.6 billion from 2019 to 2020—a decrease of 61 percent—and airport revenues were $129 billion lower than the pre-COVID-19 forecast of $199 billion, representing a reduction of about 65 percent.1 The year 2021 is set to look only slightly better, with an estimated reduction of about $110 billion in revenues compared with the pre-COVID-19 forecast.2 Simultaneously, airport operators have had to implement stringent safety protocols to protect passengers and employees. Amidst this disruption, they have had little time to focus on the future.
While the industry’s short-term difficulties are not yet over, passenger traffic volumes have started to increase in most regions and should ultimately recover. As they do, airport operators face another transformative challenge: the need to integrate a new range of manned and unmanned aerial vehicles into their operations and infrastructure, including battery- or hydrogen-powered conventional aircraft; drones for tasks such as cargo movement, aerial surveillance, or even firefighting; and passenger advanced air mobility (AAM), leveraging electric vertical takeoff and landing (eVTOL) aircraft.
All these aircraft are poised to disrupt the aviation industry significantly. Many of the most significant changes will come from the growth of passenger AAM, which involves smaller aircraft (typically two to seven seats) and a regional range varying from a few dozen to a few hundred miles. Passenger AAM aircraft, which can take off and land vertically without the need for a traditional runway, will initially require pilots. In the future, however, autonomous flights may be possible. These aircraft provide a faster and sustainable option for travelers, since they are powered by electricity or hydrogen, but they also will require new infrastructure and will change long-standing passenger flows.
It is likely only a matter of years before AAM innovations truly take off. McKinsey’s AAM database lists more than 250 active AAM projects across the globe with more than $11 billion in disclosed investment over the past five years and more than 5,000 employees globally as of August 2021. Investors, including venture capital funds, special-purpose acquisition companies (SPACs), high-net-worth individuals, and global leaders in the aerospace and automotive industries, are backing specialist start-ups, and several full-scale prototypes are already undergoing flight tests. Around the globe, work is underway to adapt regulatory frameworks and to gain public acceptance. The front-runners are publicly committed to launch commercial operations by the mid-2020s.
The speed and scope of these developments make integrating AAM an issue of high relevance for airports. Owners and operators must begin planning for this emerging transport mode today, given the long timelines for building infrastructure and for making other necessary changes. This article makes the case for action by airport owners and operators to seize this opportunity and examines the key industry developments they should have on their radar. While some operators might be hesitant to move forward now, the experience with another recent innovation offers a cautionary tale. At airports, the unanticipated arrival of ridesharing created confusion at airport curbsides, and many facilities missed revenue opportunities. Because these disruptive new services were not accounted for in the master plans, airports had to resort to patch-up solutions that often irritated travelers, such as busing them to rideshare areas. In addition, airports were not prepared for the loss of parking revenues that occurred as travelers switched from their own cars to ride hailing. As AAM takes off, airports will want to avoid similar challenges.
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Airports are uniquely positioned to benefit from early AAM growth
Airports are likely to be at the center of the AAM revolution, at least in the beginning. Their prominence will result partly from the fact that more than two-thirds of the 25 largest AAM companies have stated that airports are among their initial target markets. There are good reasons for this focus. First, the economics are attractive because of high, bundled demand for last-mile connections—the vital and currently congested links between airports and the urban areas they serve. Second, some of the basic infrastructure is already in place, both on the ground and in the air, and airport operators have the relevant skills and experience needed to manage facilities. Third, there are obvious customer benefits. AAM flights could save 40 to 60 percent of the time spent traveling to airports on ground transportation within and beyond the city limits. Business passengers would be natural early adopters.
The main use cases for AAM flights involve transport between a hub airport and vertiports in city centers or the broader catchment area, or between a hub airport and AAM landing sites at smaller regional airports. The ease of implementing these use cases will vary. For instance, an AAM connection linking an airport to a city vertiport may be difficult to achieve because of the time, complexity, and cost of developing the downtown infrastructure. Flights to vertiports in a broader suburban and rural catchment area, though less in demand, might be easier to establish and could decrease travel times.
All three use cases will require airports to integrate AAM connections into their infrastructure, investment, and business planning. And each use case will involve distinct challenges, making a “one size fits all” approach impossible.
We project that large and densely populated urban areas, such as London, Los Angeles, and Mumbai, will eventually require networks of up to 30 vertiports or AAM landing sites at small airports. Even medium-size urban areas, such as Atlanta and Düsseldorf, could need as many as 20. These facilities must offer a range of services similar to those found in today’s airports, such as passenger processing facilities, waiting areas, and aircraft-handling and -maintenance areas. Such “satellite” airports could further reduce door-to-door travel time and enhance the traveler’s experience.
Vertiports could be managed by a diverse group of players, including those in rail, public transport, real-estate, and aviation ground handling. Regardless of who is in charge, AAM vertiports could serve as physical extensions of existing airports, providing a gateway to flights originating in city centers. Airport operators might be well positioned to manage vertiports, since they already have most of the required capabilities and can capture many synergies with their traditional operations.
Even a modest AAM offering at airports could generate new revenues. Some business will come from existing passengers who prefer AAM over other types of short-haul transportation, especially if it reduces door-to-door time. Some passengers may even make extra trips because of the greater convenience.
Airports could charge landing fees to AAM operators in the same way that they charge fees to airlines. They could also provide additional services for a fee, such as charging infrastructure or ground servicing. Additionally, the new passenger traffic would increase nonaeronautical revenues from retail or food and beverage. Revenues from ride hailing, taxi fees, parking, and car rentals would slightly decrease, but the overall balance would remain largely positive. We estimate that in a hypothetical airport that serves 45 million passengers per year, AAM may generate incremental revenues of about 5 percent and increase passenger numbers by around 1 percent (Exhibit 1).
The promise of boosting passenger traffic might sound far-fetched, but experience with other novel modes of transportation suggests that it is achievable. For example, in Italy, the opening of the Milan–Bologna and Florence–Bologna high-speed-rail connections, in 2008 and 2009, contributed to the Bologna airport’s annual passenger-traffic growth rate of 7.0 percent—almost double the average of 3.7 percent in the country. The Bologna airport also significantly increased its market share among air passengers within its 200-kilometer-radius (about 125 miles) catchment area. With similar numbers, AAM vehicles could present an attractive opportunity for airports concerned about revenue growth.
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Airports need to integrate the AAM opportunity into their planning
Airport terminals and landside expansion projects are complex, multibillion-dollar undertakings. They require alignment among multiple stakeholders, as well as intense environmental assessments, feasibility studies, and many years of planning, assessment, and consultation before construction even starts. With first commercial AAM routes expected by the middle of the decade and scale-up anticipated near the end of the decade, airports must integrate these routes into their medium-term plans to make them future proof (Exhibit 2).
The challenges of doing so cannot be underestimated. Consider airspace needs. AAM vehicles, analogous to helicopters and drones, likely will require specific air-traffic-control (ATC) pathways and procedures that are independent from standard runway operations. Airports that don’t have sufficient capacity could reject AAM traffic altogether. Developing these procedures will take time, especially since there are still multiple uncertainties. For example, the performance characteristics of AAM are not yet sufficiently clear to produce specifications for airspace planning, and in the worst case could differ massively (for example, between aircraft using vectored thrust and multicopters).
On the ground, airport owners and operators must plan the location of AAM landing sites early, since they will require one to three acres of land. As noted earlier, these facilities will ideally be integrated into terminals if they are built at existing airports. If airports decide to create satellite vertiports to extend their reach, airports must plan where and when to develop them.
Finally, airports need to develop the infrastructure required to enable ultrafast high-power electric charging and hydrogen refueling. Many airports around the world are working toward electrifying ground-service equipment, such as pushback tractors, aircraft-fueling trucks, and baggage loaders.
An AAM agenda for airport CEOs
While several airports have recently announced partnerships in the AAM space, barely any of the top 50 major airports currently undertaking significant terminal and airfield expansions have explicitly stated that they are factoring in infrastructure for passenger AAM use cases. Although designing for an uncertain future is difficult, airports that hesitate to take action now could put themselves at a competitive disadvantage—and they might eventually have to spend more on infrastructure and other changes or risk losing opportunities. To stay ahead of the competition, airports should consider taking the following steps.
Consider the AAM opportunity now, defining how to integrate AAM flights into operations
Airports may hesitate to dedicate money to AAM, but experience shows that winners embrace innovation. Wellington Airport in New Zealand, for example, avoided most of the chaos experienced by airports in other countries when ridesharing became popular because its leaders specified in 2017 that the airport would create dedicated pickup and set-down space for ridesharing in exchange for a $3 fee for every ride. Similarly, some airports reached early agreements with governments and rail operators about the development of airport stations, which allowed them to decrease congestion and increase market share in their catchment areas. London’s Heathrow Airport, for example, operates the Heathrow Express as a subsidiary. The rail service transports more than 6 million passengers a year and achieves an annual revenue of around £120 million.
In addition to exploring passenger AAM now, airports should investigate cargo opportunities, since use cases in this area may gain traction earlier. Cargo AAM may also have many synergies with passenger AAM.
Weigh different business-model options
Airport operators should define their approach to AAM and create a business model based on one of the following options:
- Light touch. This model focuses on repurposing existing assets, such as business aviation terminals, and adding electric charging, hydrogen infrastructure, or both to accommodate AAM flights. Airports would invest in larger assets only when demand grows.
- Dedicated investment. Under this model, airports would set aside land and provide electric charging, hydrogen infrastructure, or both at terminals for AAM. They would also develop plans to integrate AAM travelers into the passenger flow through airports’ facilities.
- Betting on AAM. In addition to making dedicated investments in existing facilities, this model requires airports to codevelop and/ or operate vertiports in their catchment area, either as an owned business or as a service to third parties.
Set up a planning process based on codevelopment
To manage the AAM journey, airports can undertake a cooperative, staged approach. The first step would involve earmarking locations now and creating concept designs for AAM landing sites at their facilities. As AAM certification efforts continue, airport operators will have access to more robust performance data, as well as greater insight into operational concepts, both of which will allow them to create more detailed designs and specifications.
Airports could also band together to orchestrate discussions with OEMs and regulators on the future performance and infrastructure requirements of AAM vehicles. This collaboration will help them understand whether they can create standard infrastructure elements that will meet the needs of all operators or whether vehicle specifications are so different that customized facilities are needed. If the latter scenario appears likely, airports could strategize and plan for the challenge of developing an AAM landing site that could accommodate AAM providers with different vehicle dimensions, concepts of ground operations, and battery-charging or -swapping requirements.
Finally, airports need to get ATC authorities on board as early as possible. AAM promises to rewrite the rules concerning airspace around airports. For the past 50 years or so, airports have benefited from operating within restricted control zones. That might change as AAM grows, but current ATC rules do not offer a ready-to-use solution, such as the reservation of specific air corridors for AAM vehicles.
No time like the present
AAM vehicles are already well on their way out of science fiction books and toward commercial service. For airport operators and owners, with their need to plan two or three decades in advance, these vehicles are practically already here. Within the next two years or so, airport operators will inevitably find themselves in discussions on how to integrate new urban aircraft into their facilities, and indeed whether to turn AAM into an important new pillar of their business. The time to consider these challenges and embrace the potential opportunity is now.
