Written by AVISTRA Managing Director, Sara Hales
Last week we discussed some of the strengths and weaknesses airports have when it comes to playing a key supporting role in the development of the Advanced Air Mobility (AAM) industry.
As promised, this week we are expanding on the discussion, by exploring some of the various opportunities and threats posed to airports by this emerging sector - emphasising why airport operators should consider the impacts that the AAM industry could have on their businesses.
Globally, the aviation industry is already preparing for AAM, with locations such as London, Paris, Singapore, and Japan already having developed concepts of operations to support the exploration of various regulatory and operational challenges, infrastructure underdevelopment, and testing in several locations and aircraft undergoing certifications globally.
With Australia positioning itself as a leader in aviation and aerospace technology and being the host location for the 2032 Olympic and Paralympic Games, the question isn’t if this technology enters the Australian market, but when…
After all, Australia is seen as an ideal place for early commercialisation of the technology for a variety of reasons, including; a favourable climate, political stability, a globally respected regulatory environment, and a relatively wealthy and regionally diverse population with its own unique mobility challenges.
Every airport should analyse its own, unique strengths, weaknesses, opportunities, and threats with regard to AAM, however, we are pleased to share some high-level thoughts that are potentially relevant to many airport businesses.
After reading this article, if your airport is interested in developing a strategy to position the airport to benefit from the entry and growth of AAM in Australia while managing the potential business threats, please reach out. At AVISTRA, we have a deep sectoral understanding of AAM, and we’d love to help Australian airports benefit from this industry change.
Airport opportunities with regards to AAM
AAM presents a variety of opportunities for airports in Australia if they act fast enough. For airports involved in the first move of AAM technology in Australia, the benefits will be significant and can support the growth of the overall airport business. Some high-level opportunities include:
Grow airport catchment geography
Airports seek to maximise passenger travel through the airport from within (and to) the airport’s passenger catchment area. Passenger catchment areas are defined by a range of factors including proximity to other airports and other modes of transport, location of people, reasons to travel and travel time to the airport.
AAM offers the opportunity to dramatically reduce travel time to the airport, effectively increasing the radius from where an airport might draw passengers. This may be used to increase the airport’s geographic catchment area or to assist with reducing leakage to other nearby airports.
Support airline clients with first/last mile
Globally some airlines are considering the addition of AAM services as a premium airport transfer service. There is an opportunity to support airlines with the implementation of this in its operational procedures, however, planning is required to strategise how this will happen within the airport footprint. This could potentially unlock new revenue opportunities for airports.
Invest in energy production and onward sale to aircraft operators and tenancies
Many airports have already invested in the production of renewable energy, with many installing large-scale solar charging systems. Some have even created revenue streams that involve the airport operating as an energy wholesaler and selling energy to tenants. There is an opportunity to provide energy to aircraft operators, at a profit.
Growth of regional RPT – low-capacity high frequency services
Advanced aviation technology shifts the economics of flight in such a way to allow for sustainable low-capacity high-frequency regular public transport (RPT) services using electric aircraft. This may involve current airlines or new entrants to the market.
More potential client/tenants due to growth in the number of industry participants
AAM will result in a much greater number of aviation industry participants than what we have today. Airports offer a beneficial location for industry participants and can seize the opportunity to offer business premises to new industry entrants.
Investment in, and operation of, both on-airport and off-airport vertiport facilities
Airport operators are experts in the operation of aviation infrastructure. There will be opportunities for airport operators to apply this experience to the operation of infrastructure which supports AAM, creating efficiencies in management and operational functions. Airports might consider this, where the investment will further support the development of its broader passenger business (for example, by strengthening ties to key catchment areas).
Threats AAM presents to airports
AAM is a fast-evolving industry, and in some cases can pose threats to the Australian airport industry, specifically if airports aren’t currently planning for AAM. Unfortunately, this is a common approach across Australia, with some newly developed 10-year Master Plans failing to consider AAM. Some high-level threats include:
Loss of General Aviation tenants as they transition
It is anticipated that early adopters of the AAM industry will include current aircraft operators / AOC holders. This is further evidenced by the fact that in Australia, nearly all organisations that have placed early orders for AAM aircraft are current aviation operators. Many of these operators will likely operate a mixed fleet of both conventional and AAM aircraft. If the operator’s airport base hasn’t sufficiently provided the infrastructure needed to support AAM, the operators may relocate to an airport that has.
Catchment encroachment from other airports
While the ability to increase the catchment area of an airport, or to reduce leakage from an airport’s catchment through the provision of AAM transfer services, represents an opportunity, it also represents a threat. Other nearby airports may invest in the AAM approach and potentially gain passengers from neighbouring airports’ catchment areas.
Failure of the airport local/state government to attract AAM industry investment – no ecosystem development
A genuine risk for Australia is the failure to attract any meaningful AAM investment at all. The global AAM industry requires a clear path to commercialisation and a united and supportive message from all levels of government. None of Australia’s states or territories currently offer this.
Global participants at the leading edge of aircraft development and certification are currently negotiating their early commercialisation locations with jurisdictions around the world - the locations they choose are likely to define the industry over the next 10 years. If Australia doesn’t move quickly to leverage its attractiveness to the industry and capture serious investment from these companies, it may miss the opportunity completely.
There are several issues to be considered, in addition to these high-level outlines, and a SWOT will vary from airport to airport. We strongly encourage airport boards to recognise that this technology will likely be flying in Australia by 2026 and that they MUST plan now to seize the opportunities and manage the threats that it poses to their business.
The airport industry opportunities and threat analysis relating to AAM featured in this article are complemented by an article written last week focusing on the strengths and weaknesses which airports have with regard to supporting the operationalisation of AAM in Australia.
As the owner of Greenbird AAM industry collaboration platform, AVISTRA is well placed to assist airport operators who are interested in understanding the business implications and strategising and planning their response to the entry and growth of AAM in Australia.
Dedicated to the sustainable economic and social wellbeing of communities, AVISTRA provides commercial and strategic advice to airports and government focusing on air freight, aviation development, airport strategy, infrastructure investment and emerging aviation technologies. Clients trust AVISTRA to deliver the objective, data-driven insight and guidance required to inform their business strategies, allocate capital, prioritise resources, and manage risk.
For more information about AVISTRA, or to get in touch, visit: avistra.aero.