Vertiports – The fundamental service provider to the Advanced Air Mobility industry

By Manfred Hader and Stephan Baur

At the end of last year, the London-based Skyports announced the development of the first commercial vertiport in Europe, specifically designed for Advanced Air Mobility (AAM) operations, which is scheduled to launch in 2024 at the Paris Olympics. The vertiport site will take place at Groupe ADP's Pontoise-Cormeilles Airfield in Paris with many of the prominent eVTOL players (e.g., Volocopter, Vertical Aerospace, Lilium) to conduct test flights and demonstrations.

For a long time, the physical infrastructure was neglected in AAM discussions and by investors. After the turbulent year 2021, characterized by the inflationary high valuations of air taxi startups, which fell again just as rapidly in the second half of the year, the focus is increasingly shifting to other elements of the AAM ecosystem. One element is the physical infrastructure, which is essential for the operation of air taxis. However, only homeopathic amounts of investments have been made in this area so far, with Skyports having received most of the funding from investors.

Skyports Co-Founder and CEO Duncan Walker talked to Manfred Hader about his view on the AAM industry, the development of vertiports, his strong beliefs in cargo drone delivery, the business model and why he thinks regional air operation holds great promise.

We experienced an investment hype in 2020 and 2021 in the AAM industry. However, most of the funding was collected by companies that develop the actual aircraft. Investors were more hesitant to place their bets on other building blocks of the ecosystem, such as infrastructure. What is your take on the investment frenzy we experienced so far?

Duncan Walker: First of all, it is great that there is now so much funding going into the AAM industry. The massive investments in OEMs now secure the necessary funding for commercial type certification , which is a great sign for the industry as a whole. However, public markets favor companies with repeatable revenue streams, thus the AAM industry with its rather long R&D programs is now in a tougher environment and companies require a large balance sheet to make it until certification and for production ramp-up to succeed. There is every chance that the OEMs will need more money than they think to get to certification and I am a bit nervous of what the next couple of years will hold for some players, but of course I want everyone to succeed.

How can we attract more attention and investments for the other required building blocks?

Duncan Walker: I think we will see some material investments in the wider ecosystem over the next 12 to 18 months. We have to, or there won't be a viable market for the OEMs. Companies supporting the ecosystem are attractive investment propositions without single technology bets, which may give them greater potential for success. For eVTOL OEMs, the chance of success is rather binary: you either succeed or fail on certification. One possible explanation for why the surrounding ecosystem does not get the attention that eVTOL OEMs get is that it is just not as exciting and sexy, but it is super important: Flight operations, MRO, parts supply, booking platforms, air traffic management systems – all of this needs to be in place for an AAM service to be launched commercially.

Investments in the physical infrastructure such as vertiports require the investor to have quite a large balance sheet, but such investors generally have a rather low risk appetite. I can envision a two-stage approach: Private equity investors will come first and once the infrastructure proves its steady revenue streams, lower risk investors such as pension funds will come into play in a very big way.

One part of Skyports' business is dedicated to cargo drones. This can be seen by your partnership with the NHS and Royal Mail in the UK. What is your intention with such partnerships?

Duncan Walker: We see a clear business case for delivering parcels and packages in rural areas, which is currently far more attractive than urban environments. The ground-based logistics costs are far higher for rural areas, with lower volumes and longer journey times. For urban environments, the passenger use case is the more attractive one.

Cargo drones and early applications in cargo and mail transportation are a great opportunity to learn and gain experience from real-life data, BVLOS operations and public acceptance of drones. We currently fly regularly in the UK and Singapore for cargo transportation and inspection purposes and have logged over 20,000 kilometers in the last three months. The data and learnings we gather from these flights can be applied to passenger use cases too, since many operational considerations such as security aspects, air traffic control, situational awareness, and flight management are similar. While building the physical products, we gained a lot of key learnings that we would have never predicted on paper.

Similarly, you also partnered with Volocopter and launched the first passenger vertiport prototype in Singapore's Marina Bay area. How does this vertiport differ from a cargo vertiport?

Duncan Walker: While the basic requirements of the physical infrastructure are very similar for cargo and passenger use cases, there are some operational differences that need to be considered. When we build our infrastructure, we are looking at a 40-year time horizon.

We are currently adjusting our vertiports to be able to accommodate autonomous operations and an overall efficient, lean setup enabling high throughput of cargo goods and ground accessibility for further distribution. As we are demonstrating, cargo operations will be autonomous right from the start in rural areas. The goods need to go the shortest way possible from the flight deck to the ground level, where the transfer to ground-based transport occurs.

For passenger use cases, the infrastructure needs to have a higher level of comfort and amenities, to streamline the passengers through security control and on to the gates on the flight deck.

Let's turn to Skyports' business model. Do you intend to act like an airport and charge landing fees, provide "slots" to operators, or charge the end customer access fees to the vertiport area? What role does retail play, especially at passenger vertiports?

Duncan Walker: Our business model is very similar to today's airports. Skyports' vertiport revenues will come from landing fees, aircraft handling, and hangar or storage fees for aircraft, maintenance equipment, and charging. However, there will be only limited "non-aviation related" revenues, such as rental fees from retail space. The main customer proposition of AAM is about saving time. Our vertiports are designed with limited waiting areas and no retail stores beyond food and drinks – they are not designed for waiting time but for efficiency and time-saving processes. Instead, Skyports focuses on two aspects to provide superior value to the AAM aircraft operators: First, to secure the most valuable and convenient locations for vertiport construction. And second, to provide the most efficient and lowest cost operations to reduce the overall AAM ticket prices. Today's heliports do not have a sustainable cost structure for AAM – and we want to tackle this problem at Skyports.

It sounds like your business model is focused on B2B. What will the AAM passenger experience be like at Skyports?

Duncan Walker: Our business model focuses on the B2B market: Our customers are airlines, helicopter operators, or new AAM operators. We are the service provider to all AAM operators, with no direct customer-facing brand.

The vertiport experience (or "Skyport experience") will be part of the overall airline experience – normally the customer does not make their travel decision based on the airports, but rather on the shortest or most convenient journey – thus, location and an efficient vertiport setup will be key.

Thank you very much for your insights so far. The last question for today: How do you foresee the next couple of years with regard to cargo and passenger use case implementation? What role will Skyports play?

Duncan Walker: We see cargo use cases as a clear priority and scaling of these use cases is happening. We are seeing a growing number of successful proofs of concept, especially in rural areas, which transfer into recurring and long-term revenue streams. However, there is still a lot of friction with regulators and airspace rules, which needs to be resolved. Finally, the certification of larger cargo drones will be the game changer due to their higher payloads and better radar and lidar systems for navigation.

Regarding passenger use cases, the focus is now on commercial certification. Without certification, there will be no commercial operations. We hope by 2024 to see first commercially viable operations at small scale. It will take time to train pilots and ramp up the manufacturing of aircraft. Demand will not be the problem in the early years, it will be supply.

Skyports focuses on physical demonstrators rather than paper-based theory, and we plan to launch and operate physical demonstrators in Europe (Paris), Asia, and the USA. We will see consolidation of first mover cities over the next year as some navigate the complex issues hand in hand with industry and others take a wait and see approach.

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