Urban Air Mobility (UAM) Market Study

1 E X E C U T I V E B R I E F I N GU R B A N A I R M O B I L I T Y ( U A M ) M A R K E T S T U D YPresented to: National Aeronautics and Space Administration - Aeronautics Research Mission DirectorateO C TO B E R 5 , 2 0 1 8 CONTENTSE xecutive Summar yIntroduc tionMarket SelectionLegal and Regulator ySocietal BarriersWeather AnalysisMarket AnalysisConclusions1 This document is confidential and intended solely for the client to whom it is SUMMARY2 This document is confidential and intended solely for the client to whom it is analysis focused on three potential UAM markets: Airport Shuttle, Air Taxi, and Air Ambulanceusing ten target Urban areas1to explore Market size and barriers to a UAM Market . Our results suggest the following:-Airport Shuttle and Air Taxi markets are viable markets with a significant total available Market value of $500B2at the Market entry price points in the best-case unconstrained scenario-Air Ambulance Market served by eVTOLs is not a viable Market due to technology constraints, but utilization of hybrid VTOL aircraft would make the Market potentially viable -Significant legal/regulatory, certification, public perception, infrastructure, and weather constraints exist which reduce Market potential in near term for UAM-After applying operational constraints/barriers, of the total available Market worth $ can be captured in the near term-Constraints can potentially be addressed through ongoing intragovernmental partnerships ( , NASA-FAA)

2 , government and industry collaboration, strong industry commitment, and existing legal and regulatory enablers1 New York, Washington DC, Miami, Houston, Dallas, Denver, Phoenix, Los Angeles, San Francisco, Honolulu2 US Domestic Airline industry has an annual Market value of ~150B (Ibis, 2018)3 This document is confidential and intended solely for the client to whom it is SUMMARY - CONSTRAINTSUAM MARKETS FACE SIGNIFICANT CHALLENGES AND CONSTRAINTS Near Term- Immature MarketTechnology ChallengesEconomics: High cost of service (partially driven by capital and battery costs)Weather: Adverse Weather can significantly affect aircraft operations and performanceAir Traffic Management: High density operations will stress the current ATM systemBattery Technology: Battery weight and recharging times detrimental to the use of eVTOLs for Air Ambulance marketImpacts: Adverse energy and environmental impacts (particularly, noise) could affect community acceptance Longer Term- Mature MarketImpacts: Energy and Environmental Impacts of large-scale operationsCybersecurity of Autonomous systems including vehicles and UTMW eather: Disruptions to operations during significant adverse conditionsNew Entrants: Large scale operations of new entrants like UAS, Commercial Space operations, private ownership of UAM vehicles could increase the complexity of airspace management and safety Non-Technological ChallengesInfrastructure.

3 Lack of existing infrastructure and low throughput Competitionfrom existing modes of transportationWeatherconditions that could compromise safetyPublic Perception: Passengers concerned about safety and prefer security screening and preference UAM only for longer tripsLaws and regulations for flying over people, BVLOS, and carrying passengers (among others) are neededCertifications: gaps in the existing certification framework where UAM will experience challenges, particularly system redundancy and failure managementCompetition from emerging technologies and concepts like shared Electric and Autonomous Cars, and fast trainsSocial Mobility : New importance of travel time, increase in telecommuting, urbanization and de-congestion scenarios could reduce the viability of marketsPreference to fly with others they know in an autonomous UAMP ublic Perception: Passengers trust and apprehension with automation and pilot-less UAMW eather.

4 Increase in some adverse conditions due to climate change may limit operationsCONTENTSE xecutive Summar yIntroduc tionMarket SelectionLegal and Regulator ySocietal BarriersWeather AnalysisMarket AnalysisConclusions4 This document is confidential and intended solely for the client to whom it is document is confidential and intended solely for the client to whom it is AIR Mobility ECOSYSTEM INCLUDES CITY CENTER, SUBURBAN AND EDGE CITYAN EMERGING MODE OF TRANSPORTATION, THE SPECIFICS OF UAM ARE YET TO BE DEFINEDNASA defines UAM as a safe and efficient system for air passenger and cargo transportation within an Urban area, inclusive ofsmall package delivery and other Urban Unmanned Aerial Systems (UAS) services, that supports a mix of onboard/ground-piloted and increasingly autonomous operations. C I T Y C E N T E RHigh-density downtown employment centers and surrounding neighborhoodsS U B U R B A NPredominantly lower density residential neighborhood with some mixed use facilitiesE D G E C I T YMedium-density employment centers outside of the Urban coreTHE PROMISE OF Urban AIR MOBILITYD econgest Road TrafficImprove MobilityReduce Transport TimeDecrease PollutionReduced Strain on ExistingPublic Transport NetworksReduce Traffic Accidents6 This document is confidential and intended solely for the client to whom it is CONCEPT IS ENABLED BY KEY TRENDSI mprovement in Communications TechnologyImprovements in GPS AccuracySmaller, Lighter and Cheaper SensorsSmaller Microprocessorswith Fewer Power RequirementsEnergy Storage OptimizationAnalytics and Artificial Intelligence Improvements (Autonomy)

5 Noise ReductionMechanism Improvements 70+ manufacturers worldwide including Boeing, Airbus and Bell Helicopters Over $1 billion investment made as of September2018 High profile events organized around the world in 2018 Uber Elevate (1200+ attendance, 10k+ online participants), LA City s mayor gathering, etc. This document is confidential and intended solely for the client to whom it is ADVISORY GROUP (SAG)SAG The SAG is a diverse and independent group of Urban Air Mobility and/or related Market experts and stakeholders that will inform key decision points in the project and help refine the Market assessment methodology based on their expertise in the UAM spaceOBJECTIVES Create a community of UAM experts to inform strategic discussion Review project analysis and conclusions Validate the Market assessment methodology Inform key decision pointsLegal and RegulatoryAssociationsInsurance and Real EstateInternationalVenture CapitalManufacturersOperatorsFederal GovernmentEducational InstitutionsState and Local GovernmentNote.

6 Details about members available in Appendix 1 CONTENTSE xecutive Summar yIntroduc tionMarket SelectionLegal and Regulator ySocietal BarriersWeather AnalysisMarket AnalysisConclusions8 This document is confidential and intended solely for the client to whom it is FOCUS MARKETSOUR METHODOLOGY CENTERS ON EVALUATING MARKETS WITH INTERESTING B ARRIERSAs we walk through our process, the team screened and prioritized markets that will be most relevant for further Study as part of the initial and final assessments. STEP 1 IDENTIFY MARKETSM arket Market TypeCategoryFirst Response (Public Services)Ambulance Police Firefighter Natural Disaster and Armed Conflict ResponseAir CommutePrivately OwnedTrainTaxiAir ShuttleAirport ShuttleCompany ShuttleEntertainmentand Media Film/TV/Radio StationsTourismReal Estate andConstruction Aerial Showcasing, Inspections And SurveyAsset/Building MaintenanceUtilities asset maintenanceSTEP 2 Market CALIBRATION CRITERIAE conomicsTechnologyOperational ChallengesMarket SummaryMarket SizeOverall Market size of legacy Market in 2017 Market Growth RateExpected growth rate of legacy marketSocietalNoise annoyance and community acceptanceLegal & RegulatoryAir Traffic Management, local, state and federal lawsTechnical SpecsSpeed, Range, TRL Payload and AutonomyChallengesEnabling Infrastructure.

7 Navigational constraints and network scalability Technology CostPrice point for legacy technology, R&D, Capital and Operating costChallengesWillingness to Pay, Competitive Price Pressure, investmentsMarket CalibrationSTEP 3 SCREENED MARKETSS creened and Prioritized marketsAirport Shuttle (Early Market )Air Taxi (Mass Market )Air Ambulance (Complex Market )Note: Detailed Methodology available in Market Selection DeliverableNew York, NYWashington, , FLHouston, TXDallas, TXDenver, COPhoenix, AZLos Angeles, CASan Francisco, CAHonolulu10 FOCUSED TEN Urban AREASAll analysis is focused on the following t en Urban areas from a shortlisted pool of 40 Urban areas. These 10 Urban areas are representative of the US and will illuminate a wide set of barriers for UAM that could be operated with human pilots or autonomously. Note: Detailed Methodology available in Initial Analysis DeliverableCONTENTSE xecutive Summar yIntroduc tionMarket SelectionLegal and Regulator ySocietal BarriersWeather AnalysisMarket AnalysisConclusions11 This document is confidential and intended solely for the client to whom it is AND REGULATORY BARRIERS -SUMMARY Surveyed and analyzed the Federal Acts, Federal regulations, State laws, and local ordinances for each of the three UAM Urban markets, identified legal barriers, along with the gaps and path to certification.

8 Air Taxi, Ambulance, and Airport Shuttle UAM markets share common regulatory barriers. There will be challenges in determining which of the existing FAA certification standards applyto the types of vehicles being considered for the Air Taxi or Air Ambulance UAMs, and/or how existing certification standards can be met or should be amended. -Air Ambulances will require further evaluation due to the requirements of an operator s air ambulance procedures and air-ambulance-specific sections of their General Operations Manual (GOM). gaps in current certifications mean that new standards will need to be developed, especially in areas related to system redundancy and failure document is confidential and intended solely for the client to whom it is addressed.*Additional details on the legal and regulatory analysis can be found in the accompanying Legal/Regulatory Interim Analysis AND REGULATORY BARRIERSAir Taxi, Ambulance, and Airport Shuttle UAM Markets share common Regulatory BarriersRemotely piloted and autonomous UAM markets require the following aviation regulations (either modification of existing regulations, or new regulations), as the current regulatory structure does not fully allow for these activities to be performed: Regulations for beyond visual line of sight (currently only with lengthy waiver process) Regulations for operations over people, streets, etc.

9 (currently only with lengthy waiver process) Regulations for when air cargo is being carried commercially and across state lines Regulations for when a passenger or patientis being transported in a UAM (remotely or autonomously piloted) either within visual line of sight or beyond Regulations for flight in instrument conditions Regulations for airworthiness certification of remotely piloted and autonomous aircraft Training and knowledge requirements for pilots and operatorsA legal framework for addressing privacy concernsshould be developed outside of the aviation regulatory document is confidential and intended solely for the client to whom it is document is confidential and intended solely for the client to whom it is AND LOCAL LAWS RANGING FROM NO DRONES TO PROTECTING UAS OPERATIONSC aliforniahas a law favoring first responders In 2016, SB 807 was chaptered - Provides immunity for first responders who damage a UAS that was interfering with the first responder while he or she was providing emergency services.

10 AB 1680 Makes it a misdemeanor to interfere with the activities of first responders during an a law that prohibits UAS except for law enforcement SB 2608 Prohibits the use of unmanned aircraft, except by law enforcement agencies, to conduct surveillance and establishes certain conditions for law enforcement agencies to use an unmanned aircraft to obtain a law favoring first responders In 2016, SB 1449 Prohibits certain operation of UAS, including operation in violation of FAA regulations and operation that interferes with first responders. The law prohibits operating near, or using UAS to take images of, a critical facility. It also preempts any locality fr