1、Global Research9 February 2020Aerospace & AirlinesUBS Conference Call Takeaways: Urban Air Mobility and the changing paradigm of airspaceTakeaways from our conference call on Urban Air MobilityLast week we held a multi-team conference call with Dr. Parimal PK Kopardekar, the Director of NASA Aeronau

2、tics Research Institute and an expert in advanced air mobility, autonomy, & airspace operations management. We discussed the changing paradigm of airspace caused by the intro of autonomous vehicles (mainly drones), as well as implications for current airspace management, impact to commercial aviatio

3、n, and PKs opinion on the timeline for introduction of urban air mobility. See inside for replay info.Transitioning the airspace from a single source integrator to share and care The introduction and proliferation of unmanned aircraft into the airspace changes the paradigm of controlled air space fr

4、om a centralized ATC paradigm (e.g. air traffic controller managing communications and operations within the classes of air space) to a digital, cooperative, and intent-sharing environment via software. This permits drone operators to electronically see and communicate with each othercreating a shar

5、e- and-care environment managed by exceptions. Though the FAA can put restrictions on air space, the intro of unmanned aircraft into the airspace catalyzes the creation of new safety regulations and certifications which have yet to be fully ironed out.Impact on AviationPK does not see much impact on

6、 commercial aviation from the introduction of urban air mobility vehicles, largely due to radius of operations and current barriers to technology (e.g. battery life). There could be some risk of interplay with regional airlines (e.g. short hops between Chicago and Detroit) or 100-mi to 200-mi range

7、flights but the replacement risk is minimal for beyond regional line of sight routes. The greater risk of competition and replacement is for cars.When will we have urban air mobility?The timeframe of urban air mobility is still far off; though you could have certification of vehicles in 2021-2024, i

8、ts too early for scaled operations. With introduction of new vehicles, there are scalability issues, plus the need to build out the infrastructure (supply chain, landing pads, maintenance), and, importantly, the need to balance innovation and safety. The technology is too nascent to be a real invest

9、ment right now. Whats more in line of sight, however, is urban autonomous package delivery.AerospaceAmericasEquitiesMyles Walton, PhD, CFAAnalyst HYPERLINK mailto:myles.walton myles.walton+1-617-439 8501Louis Raffetto, CFAAnalyst HYPERLINK mailto:louis.raffetto louis.raffetto+1-617-439 8115Emilee De

10、utchmanAnalyst HYPERLINK mailto:emilee.deutchman emilee.deutchman+1-617-439 8502Timothy FurcilloAnalyst HYPERLINK mailto:timothy.furcillo timothy.furcillo+1-617-439 8103 HYPERLINK /investmentresearch /investmentresearchThis report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND RE

11、QUIRED DISCLOSURES BEGIN ON PAGE 17. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only

12、a single factor in making their investment decision.A replay of our call may be accessed through the following: Audio Replay Dial-In: +1 617 801 6888Toll Free Number: 1 888 286 8010 (US)Passcode: 37265798Transcript of the CallWe present below highlights from our recent call with Dr. Parimal Kopardek

13、ar, the Director of the NASA Aeronautics Research Institute (NARI) and NASAs senior technologist for Air Transportation Systems and principal investigator for the Unmanned Aircraft Systems Traffic Management (UTM) project. We have edited the transcript below for clarity. Minor grammatical changes th

14、at do not impact the meaning of content have been applied. Changes to content to clarify meaning have been underlined. What we consider to be key points have been highlighted in bold. The opinions expressed by Dr. Kopardekar herein do not necessarily reflect the views and opinions of UBS. UBS accept

15、s no responsibility for the accuracy, reliability or completeness of the information and will not be liable either directly or indirectly for any loss or damage arising out of the use of this information or any part thereof.Attendance List:Myles Walton Parimal Kopardekar Celine Fornaro Jarrod Castle

16、Steve Fisher Tom WadewitzTitle of Meeting:UBS Conference Call: Urban Air MobilityHosted By:Myles WaltonCoordinatorGood day, everyone. Welcome to the UBS Conference Call: Urban Air Mobility hosted by Myles Walton. My name is Chris, and Im your event manager. During the presentation your lines will re

17、main on listen-only. I would like to remind all parties this conference is being recorded for replay purposes.Now Id like to hand over to Myles. Please go ahead.MylesThanks, Chris. And thanks for joining us on the call today on what would be a topic of interest, future of travel with a special focus

18、 on urban air mobility. Im Myles Walton, the US Airspace and Defense Analyst here at UBS. Im joined by Celine Fornaro, the UBS European Airspace Defense Analyst; Jarrod Castle, the UBS European Leisure and Transport Analyst; Steve Fisher, the UBS US Industrials Engineering and Machinery Analyst; and

19、 Tom Wadewitz, the UBS US Transportation Analyst here in New York.Were very excited to have and be hosting Parimal Kopardekar from NASA, whos a renowned expert on the topic at hand today. Hes more famously known as PK, so were going to go with that as his call sign today. For compliance reasons, I h

20、ave to read this. As a research analyst, Im required to provide disclosures relating the nature of my relationship in that of UBS with any company in which I express a view on the call today as well as other analysts expressing their views. Disclosures are available at UBS.com/disclosures. Alternati

21、vely, you can reach out to me, and I can provide you them after the call.There are slides for background that should have been distributed. We wont be going through them one by one, so if you dont have them, youre not at a loss. But if you do want them, again as background you can reach out to me an

22、d thats HYPERLINK mailto:myles.walton myles.walton, and we can send them over to you.First, as an introduction to our speaker, PK is the NASA Senior Technologist for Air Transportation Systems. Hes also the Principal Investigator at NASA for Unmanned Aircraft Systems Traffic Management, and then las

23、tly, he has a laundry list of a resume, but I think one of the more cool things is hes one of the 25 most influential people in the commercial drone industry. His knowledge base is right up there and exactly where we want this topic to be today.So welcome, PK, and thanks so much for taking some time

24、 with us.PKThank you, Myles. Appreciate you inviting us. This is great. Im happy to discuss with you how the ecosystem is evolving.MylesSo lets start there. In terms of giving us a baseline, talk about the air space, how its divided, where ATC is involved in each layer, and then well go from there a

25、s it relates to the inversion of the future of air mobility and drones to the like.PKHappy to do that. Air space is divided into two segments, roughly uncontrolled and controlled air space, and theres final division of that which is classification of air space ABCD based on the indiscernible 34:17 t

26、hats needed. The way to characterize class B air spaces around big cities like San Francisco, the airports, they are in class B air space. Class A air space is usually 18,000 feet and up. And then below that is E in the remote areas where uncontrolled air space is called class G. Thats sort of the r

27、ough division, but fundamentally when you are in a controlled air space, air traffic controller is giving you clear answers for every change, any change in heading, altitude, speed. And in uncontrolled air space, largely the operations happen with regional flight rules under regional metrological co

28、nditions, so pilots can see each other and they avoid each other; mostly general aviation operation in that environment.But we started to look at this classification, and the drones are going to operate many places, so we changed the perspective from uncontrolled and controlled air space to somethin

29、g we call unmanned aircraft system traffic management. In the current air traffic control paradigm, because air traffic controller is the only entity that has all the information through radar, through communications with pilots, they are the only ones who can tell you where to go where the air spac

30、e is clear for you to turn right or left or up or down and slow down or speed up. We changed that paradigm with unmanned aircraft system traffic management by creating a digital, more cooperative, intent-sharing environment through application protocol interfaces software.This allows now all the ope

31、rators of drones to electronically see each other and change their direction based on what they know about themselves and what they know about others. Its now a much more share-and-care type environment rather than a single source thats sittingintegrating all the information and basically keeping it

32、 separate. So thats the clear in-place model which is the current air traffic control system, and we are going towards digital cooperative service-oriented architecture and a model which leverages managed by exceptions.So FAA can put out restrictions on air space, but we basically allow operators to

33、 change their profiles as necessary based on their business conditions and business use cases. Weve been the regulatory authority of FAA, so that paradigm changes. And the reason thats important is because todays world, air traffic controllers world, the air traffic controllers workload is one of th

34、e limiting factors to the capacity. So when we change to this digital manage by exception, service-oriented architecture-based environment, we unleash that capacity. Thats the fundamental reason why we are doing this. Air traffic controller is no longer in the middle of every conversation, every dec

35、ision, every communication with the pilot, so that changes the paradigm. They dont have to detect every conflict and resolve everything. We are distributing through federated system very responsibly.MylesHow much of this is the system that the aircraft are sitting in, and how much is dependent on ev

36、ery aircraft being compliant to be in that system that it sits in? So ADSB is obviously a mandate thats taken place, but you have a million-and-a-half registered drones, you have 300,000 registered aircraft of all types, so how much is it governed by the system versus the components having the right

37、 electronics or features?PKThe indiscernible 38:22 is definitely important, but like you pointed out ADSB mandate, the ADSB mandate does not apply to close airspace. If youre operating in an uncontrolled environment, you dont have to have ADSB. What we are doing is a much more scalable way of making

38、 the future operations altogether. This is sort of a classical disruptive innovation in indiscernible 38:48 or terminology. Where we are starting in a small place which is uncontrolled, there are no services provided thats why its called uncontrolled by an air traffic controller by in large and then

39、 we started with that and showed that this model of digital interaction managed be exception works then we are also allowing third parties. This is where we opened through new indiscernible 39:16 we opened the landscape for third parties to provide services, but currently those services are exclusiv

40、ely provided by air navigation service providers ineach country. In our case its FAA, but that limits the growth and acceleration of transformation, so by third party services we like this could be communication, navigation, flight planning, weather data, tracking and locating aircraft or drones, al

41、l of that can be done through third parties under the preview of FAA regulatory authority.That changes the game completely, because now your competitive course ph is acting and the marketplace takes over.MylesThat makes sense. The big picture question, and then well probably come back to the details

42、, but the big picture question everybody on the phone probably wants to know is you have the view of urban air mobility at scale in a city complex or a scale on a regional complex, whats the realistic timeline to get there? You have Uber with a 2023 EIS for some of their first commercial service int

43、roductions and a couple of larger cities signing up to that. I mean is that a timeframe where you could have urban populations with air mobility at some level of scale?PKLet me just say the urban air mobility happens today; so theyre called helicopter operations, and you saw the worst of that this w

44、eek with Kobe Bryant. But where we are headed on urban air mobility, what you are going to see in 2024 is still an onesie-twosie type stuff. There are many challenges to scale, so what we have done the first thing we did is we understood the barriers, we defined the framework, and something called u

45、rban air mobility maturity levels. They are like SAE autonomy lives, or zero to five, but in our case its one to six. One is sort of start of the low-density operation, and then going to three which is medium density, medium complexity operation. Six is highly complex, highly dense operation or lots

46、 of cities and such.To get to UML 3, I think its a long road. We are still talking about 10 to 15 years to get to highly automated services. The initial 2023, 2024 people are still talking about piloted, so there are a number of issues to get to scale. One is right now we dont have enough pilots; se

47、cond is airspace issues need to be sorted out, so were doing research; battery is another one. Infrastructure like indiscernible 42:09 access, theres a lot that needs to happen on indiscernible 42:13. Indiscernible 42:14 and then power consumption, and the zoningrequirements, all of that need to be

48、changed. The noise, understanding or acceptance or autonomy, and then to be honest with you supply change.If you think about this is the least topic. We are doing a workshop next week on the supply chain aerospace, and the topic here is if youre going to operate in regions with a bunch of vehicles,

49、some of them are going to break or they would need routine maintenance like your cars do, and you go to the local dealer or local garage, and you get that fixed. If theres something wrong, the part shows up. There is a supply chain available. Currently there is few of supply chain available for thes

50、e things, and if we dont set up the maintenance repair overhaul for these supply chain to enable this, they wont scale.The manufacturing right now of these vehicles just cant happen at this scale. If everybodys blaming the 10% on the cars would be replaced by EV cars. If you think about how many car

51、s we produce every year in the United States 3.9 million cars are produced and worldwide its 79 million. If you wanted to replace 10% of 3.9 million cars thats like 400,000 a year. You need to produce these vehicles. Nobody has capacity to make that many EV car- type production no one.Because it req

52、uires FAA production certificate the parts supplier and such is really interesting, and people havent understood. Im encouraged to see the car companies getting in there, but I think theyre going to have to learn how to become aviation-grade manufacturer. Its not just replacing one indiscernible 44:

53、05 to another. Aviation-grade parts manufacture, you need to have a certification, and you need to follow certain processes, so we are also taking steps to build that.All these things, my main point there is the reason we build the UML is the whole ecosystem has to be one. The aircraft is designed.

54、Its urban-capable aircraft, ability to manufacture them at scale. Aerospace operations accommodating them at large scale, and infrastructure and communities who are willing to accept them in their backyards at scale. All of them have to work together, thats why the reason for UML is an ecosystem-wid

55、e metric rather than individual metric, and we are also figuring out what the research is to say what are the requirements when we say urban-capable aircraft. What kind of shielding we need for electromagneticinterference, how do they work when GPS doesnt exist, how do they scale when the pilots are

56、 not on board, how do they operate the requirements for that autonomous or simply by regular operations. Lots of things that are unknown, theyve all been part of ours, but those need to be solved to get to the final scale that were really talking about.Without that, there is no way we can get to the

57、 highest scale operations. So that research is ongoing. NASA is the primary holder of that research, but there are other entities also doing some research, but its going to take a while to get that UML 3. Short answer to your question is its at least 10 to 15 years away.MylesOkay.CelinePK, hi. Its C

58、eline here.PKHi.CelineI just wanted to ask you, regarding the operational evolution going from piloted to autonomous transport, some of these key technologies that you would highlight and maybe in particular regarding the drones and some of the corridors that are being tested right now in Syracuse,

59、Upstate New York, trying to understand how you certify the pilot on the ground, how you make sure that these are safe people from a cyber and security point of view as well as the drone. Thats theres no rogue interaction. I mean how do you increase the protection around these systems as well? Thank

60、you.PKThats a great question. We have been working with selective and indiscernible 46:43 and they had that 50- mile UTM corridor. There was a key to resolving infrastructure about surveillance, looking at drones and their location, but also looking at other aircraft and how do you make sure that th