Five questions to understand the hot low altitude economy
Low-altitude economy is one of the hottest concepts of 2024
Most concepts can only fire for a short period of time, but the low altitude economy is different - human life will inevitably expand from the two-dimensional ground to the three-dimensional sky, and all order and interest in the sky will have to be built from scratch, which means trillions of dollars of room for development.
The year 2024 is the first year of low-altitude economy. From policy buzzwords to real low-altitude consumption and low-altitude life, there are hurdles such as infrastructure, technical routes, business models, and regulatory innovations that need to be crossed one by one.
The broad outlines of the future have emerged:The land is a resource, the sea is a resource, and the sky is natural. To develop the economy, the human journey never stops.
Here are five core questions to look at the hot low altitude economy.
01
What is the difference between the old and the new low altitude economy?
A question always lingers in the minds of many people: drones, helicopters, hot air balloons and so on are familiar things, nowadays the newly proposed low altitude economy in the end what is it?
The traditional low-altitude economy is dominated by general aviation, supplemented by non-marketable low-altitude flight activities.
For the current proposed low altitude economy, there is no clear official definition, the industry consensus is: below 3000 meters altitude, flight activities as a traction, derived from the sum of economic forms. Guo Liang, CEO and Chief Scientist of Wofei Changkong, said that the low-altitude economy can be understood as the new navigation, with three major characteristics:Vertical take-off and landing, new energy sources, intelligent driving.
The significant expansion of outreach is first reflected in changes in the form of aircraft, with the emergence of new types of aircraft such as eVTOLs (commonly known as flying cars) and drones. Compared with eVTOL, which is still in the R&D and growth stage, China has a complete industrial chain and obvious cost advantages in drone manufacturing, and has dominated the formulation of a number of international standards, which not only enables the mass production of high-quality drone products, but also spawns global consumer drone market leaders such as DJI.
By the end of 2023, China had about 2,000 drone design and manufacturing units, nearly 20,000 operating companies, and 1.267 million existing unmanned aerial vehicles with real-name registration, an increase of 322,100 TP3T year-on-year in 2022; 194,000 people hold drone operator licenses, with huge market potential.
Under the new trend, the deep-rooted traditional aviation field of enterprises have also begun to try to transform, for example, has been listed for a full 24 years of CITIC HaiDi, in May began to operate Shenzhen - Zhuhai helicopter routes, 20 minutes to fly through the land two hours of travel, priced at 999 yuan, one round-trip every day, attracting a number of time-sensitive, price-insensitive passengers. Traditional companies are transforming and new businesses are emerging.
Low-altitude economy does not emphasize the breakthrough of "neck-breaking" technologies in manufacturing, such as building a domestic helicopter, but rather emphasizes broader economic values, such as the creation of low-altitude consumption. Currently, China's low-altitude consumption market is still in its infancy, and according to the Civil Aviation Administration of China (CAAC), the number of people who will participate in air tours and air sports in 2022 will be about 480,000 people. According to relevant studies, it is estimated thatChina's low-altitude tourism economy is expected to reach more than 200 billion yuan by 2030, and there is huge space for the future development of low-altitude tourism.
02
Developing a low-altitude economy, why now?
In February 2021, the concept of "low-altitude economy" was first written into the national plan in the Outline of the National Comprehensive Three-dimensional Transportation Network Plan issued by the Central Committee of the Communist Party of China and the State Council.
Local governments have responded one after another. According to statistics, as of the end of May 2024, 29 provinces, autonomous regions and municipalities have included the contents of "low-altitude economy" in their 2024 government work reports, which shows that the governments are resolute in developing low-altitude economy.
According to Tian Gangyin, Chairman and President of United Aircraft Group, the development of low altitude economy has four purposes:To provide new impetus for national economic development, new means for social and public services, new space for regional economic development, and new support for national defense and military construction.
The low-altitude economy is aiming at a more ambitious goal. the market size of the low-altitude economy in 2023 is 500 billion yuan, and according to the plan, it is going to grow to 2 trillion yuan by 2030, forming a real trillion-dollar market size.
A simple business logic is that it is not easy to maintain stable growth in the original business, and significant growth is always hidden in the new business, to innovate in exchange for growth.
Where does the trillion-dollar market materialize? For China, the trump card is the accumulation of new energy industry chain. Low-altitude economy not only adopts the "lane-changing" strategy similar to that of new energy vehicles, but also stands on the shoulders of the new energy vehicle industry. From the supply chain point of view, eVTOL parts 70%-80% overlap with new energy vehicles; another 20% are highly reliable and expensive parts used in traditional aircraft.
Technological breakthroughs make new industries possible. It is the maturity of China's aviation technology and the improvement of the industry chain, the improvement of the energy density of electric cores, the maturity of high-power and high-power ratio motors, and the improvement of control and algorithm technology in recent years that have made eVTOL possible, said Jiang Jun, founding partner and chief marketing officer of Shanghai Timeless Technology Co.
03
Who is the core track of the low altitude economy?
Low-altitude economy trillion market, the most concerned about the temporary flight is not up eVTOL. a familiar comparison is: Shenzhen to Zhuhai, driving to two hours, while the air cross-sea flights only need 20 minutes. But eVTOL is still in the early stages of development, the technical route has not yet been finalized, the landing will be at least three years, which represents the direction of the low-altitude economy, but not all of the trillion-dollar industry.
Grasping consumption, building airplanes, and engaging in infrastructure are the three core segments of the low-altitude economy, which together hold up a trillion-dollar market space.
The first is to build airplanes. Compared to new energy vehicles, low altitude vehicles are more thorough subversion of the industry - whether the car is an oil car or a tram, the road has been paved, the car can be bought to drive, and the space to sell the car is also readily available, but only from the sale of oil cars to the sale of trams; but in the low altitude, everything is new, and it is necessary to replicate everything on the ground into the air, the market space is even bigger.
Just as aircraft manufacturers build airplanes and airlines buy them to make money, the low-altitude economy is similarly so divided. DDT is the leading company in ground transportation, and similar operators will emerge in low altitude. The difference is that DDT does not own vehicles and has a lighter asset model, while the maintenance and flight threshold of aircraft is higher, requiring more assets and operational capabilities from operators.Therefore, to build a low-altitude mode of transportation, what is needed is not a particular operator to bear the risk alone, but a complete ecological chain to work together.
To get rich, we must first build roads, and China's automobile market's sales surge after 2000 could not have been achieved without the country's massive road infrastructure development. Nowadays, for the low-altitude economy to take off, on the hardware side, a number of take-off and landing sites should be built, and on the software side, a number of digital infrastructures such as communication, navigation and surveillance should also be developed.
An intuitive example is that while there is navigation for driving on the road, this area of low altitude is still a blank slate, with positioning, mapping, and navigation technologies in their infancy.
04
Why is the top of our heads
Still no LEOs in sight?
What is most lacking in the low-altitude economy? Practitioners agree: the lack of scenarios, especially mature, more high-frequency scenario applications.
Low altitude + culture and tourism is the main scenario at this stage, which is led and promoted by the local government, such as intra-city sightseeing tours, intra- and inter-city rapid transportation, etc. In addition, exporting overseas is also the direction, and the Middle East is an important market.
While low-altitude consumption attracts attention with its novelty scenarios, the cargo market may seem less "sexy" but actually has the same high degree of certainty and potential.
Li Jianwei, managing partner of Zhencheng Investment, believes that the market for unmanned cargo planes is much larger compared to flying cars that focus on intra-city air transportation. Using unmanned instead of manned driving, the cost per ton kilometer drops by 60%, enabling efficient and safe point-to-point flights, bringing revolutionary changes to the logistics industry, and also circumventing the problem of scarce landing and takeoff resources at large urban airports.
According to the Shenzhen Drone Industry Association, the drone market size will reach 160 billion yuan in 2024, of which about 30 billion yuan in the express logistics drone market size. In Europe and the United States in the field of cargo drones are still blank, China is likely to become the forefront of this field "only".
The application of low altitude economy in the logistics field is currently focused on fire fighting, emergency rescue and other government-oriented (to G) sectors, and in the future, we have to continue to improve the economy of transportation and enter a wider range of markets.
Zhao Torch, senior partner of Rongyi Investment, judged that the low-altitude economic scenario should satisfy three needs in order to achieve a real user willing to pay sustainably:The first category is the information dimension, because drones stand high and see far, and can be used for sea defense and security, fishing ban patrols, forest and oil pipeline patrols, etc., efficiently replacing manual labor; the second category is the energy dimension, which quickly transports people or goods from A to B, with a shorter time and lower overall cost; the third category is the emotional dimension, such as tourism and skydiving and other airborne sports, which, unlike the previous two categories, do not generate actual economic value, but rather provide emotional value for the users to provide emotional value.
05
When can I fly when I want to?
For the low-altitude economy, the biggest obstacles to development areThe strict control of low-altitude airspace is reflected in the clear limitations on flight altitude and the complexity of flight application procedures.
Even during the 9th World Drone Congress, there were no drones over the venue, and all related flying activities were concentrated in a park along the coast.
In fact, military-led airspace management is an inevitable stage in the development of the global aviation industry. In the United States, with the progress of the civil aviation market in the past few decades, airspace resources have gradually tilted towards civil aviation, changing from military-led to civil aviation-led, with less than 20% of the airspace currently under military control.
China is also going through such a process. The breakthrough step occurred in November 2023, when the Civil Aviation Administration (CAA) and the Office of the National Air Traffic Management Committee (NATMC), among others, issued the Regulations of the People's Republic of China on the Management of Airspace (Draft for Public Comments), which delineated seven categories of airspace, with the most important change being the delineation of Class G and Class W uncontrolled airspace below 300 meters of true altitude, which simplified the procedures for approving low-altitude flight activities considerably.
Entering 2024, with the increasingly high rhetoric of low-altitude economy, CAAC has also repeatedly released positive signals of airspace reform, stating that it will cooperate with relevant departments to do a good job in airspace categorization and low-altitude airspace management reform pilots to increase low-altitude flyable airspace; jointly strengthen the construction of service guarantee system for low-altitude flight activities, and continue to improve the plan approval, air traffic control, meteorology, communication, surveillance and other services and guarantees for low-altitude flight activities.
Safety is the core of open airspace, even if the accident rate of aircraft is already one in several million, but when a large number of aircraft fly into the sky, the risk index increases exponentially, and if there is an accident every few days, it is a huge risk to the aircraft and to the safety of people and property on the ground. If the aircraft is designed with internal escape, automatic bypass of ground buildings and other risk avoidance features, the overall safety is controllable, the subsequent regulation is open to the possibility.
The exploration of a unified management platform has taken off, with the CAA-led Integrated Civil Unmanned Aerial Vehicle Management (UOM) platform going live on January 1, 2024, theFunctions such as manipulator management, registration management, air traffic management, and airspace information dissemination are realized. More test areas are emerging and as of May 2024, the CAA has approved 17 test areas and 3 test bases.
