There are many opportunities in aviation infrastructure given the market growth in Advanced Air Mobility (AAM). Numerous countries are taking action to enable infrastructure development: in the United States, the FAA issued in September 2023 a conditional approval for the United States’ first public-use vertiport. Across the globe, leadership in Dubai approved in February a vertiport design with intent to develop a vertiport network in the city for launch by 2026. Nevertheless, AAM infrastructure still has ample room for growth as compared to principal aircraft manufacture, due to a variety of constraints for infrastructure developers.
Investment opportunities in infrastructure
Infrastructure for new aviation technologies encompasses a complex ecosystem, including landing pads (vertiports), permitting, zoning, airspace, and digital infrastructure. Investment statistics highlight the need for more investment: in the U.S., for example, it is estimated that an additional $10 to $30 billion dollars is needed to build out AAM infrastructure in the 38 largest U.S. markets. Comparing this need against the existing investment in principal aircraft is illustrative: in the first ten months of 2022, principal aircraft received an estimated $15 billion in total disclosed investment. That is to say that investment in aircraft has far exceeded that of the supporting infrastructure.
The projected benefits of an AAM ecosystem appear to demonstrate a ripe investment opportunity: one study estimated that AAM could add $11.4 billion to the gross domestic product of a U.S. state by 2045, including the creation of more than 15,000 jobs and $2.5 billion in tax revenue. Still, many factors inform a potential investor’s decision to invest. As discussed here previously, challenges associated with securing infrastructure investment include confidence for the investor in transaction structure and investments routes, and marked progress in business success. This may be difficult for infrastructure developers, whose operations may be thwarted by regulatory roadblocks, but still require multiple investment series to survive.
To that end, in the section below, we identify regulatory challenges for infrastructure developers pursuing operational success to attract additional investment. Specifically, we provide a case study (vertiports) and analyze regulatory challenges for infrastructure developers, including collaborating with multiple authorities, land/airspace use and guidance documents.
Vertiports Case Study
Regulatory challenge: collaboration with authorities
Although several governments have taken steps towards permitting vertiports, the path towards governmental permissions may be complex. Safety regulators would argue that the complexity is warranted, considering the nascent stage of vertiport development.
Nevertheless, a seemingly simple task of identifying the authorities at play may be a challenge for an infrastructure developer. Stated differently, the number of entities involved in governmental permissions may be a surprise for infrastructure developers. In France, for example, an airport operator announced last year the development of a vertiport near Paris (Pontoise – Cormeilles) in conjunction with an infrastructure developer.
For the infrastructure developer, the vertiport planning process included the coordination of the airport operator (Groupe ADP), which owns and manages certain international airports, including Parisian international airports Charles de Gaulle, Orly and Le Bourget. The planning process also included the French Civil Aviation Authority (DGAC, supported by the French Ministry of Transports), and the state-owned entity operating public transportation in Paris (RATP). In this case, the airport operator needed to agree to new construction on-site, and the aviation regulatory body needed to approve from a safety perspective.
Infrastructure developers should take note of the need to engage early with national and regional entities involved in transportation and airport ownership and operation. These groups were brought to the table early in the planning process for Pontoise – Cormeilles, helping lend to the acquiescence of this variety of stakeholders in the approval process, each with a different core mission; in this case, airport operations, airport safety, and local transit issues.
Regulatory challenge: airspace laws
Determining airspace regulations is another challenge for infrastructure developers, and key to protecting their investment. At the time a vertiport permit is issued, for example, there may exist a clear entrance and egress path to and from the vertiport. But governments vary on the type of ongoing airspace protections offered airport developers, especially if the airport/vertiport is privately owned.
In the U.S., for example, an infrastructure developer would need to seek a construction permit from a U.S. state and/or local authority to build a new structure on a potential airfield. The developer would also be required to notify the federal government if the infrastructure they intend to build is an airport, or if the infrastructure in question creates an airspace hazard as determined by federal government. Even with the completion of the steps above, the right to entrance and egress to a vertiport would require additional attention, and would not necessarily be guaranteed if an airport permit was issued to the developer.1
In the European Union (EU), airspace regulation and operations also occur on a shared basis. The European Union Aviation Safety Organization (EASA) is an agency of the EU and is responsible for safety regulations, including type certification, air operations, and also monitors EU members’ implementation of the regulations. While air traffic management and air navigation are regulated by EASA, it is coordinated by EUROCONTROL. EUROCONTROL was born out of a 2001 package of measures relating to air traffic adopted by the European Commission, with the goal of implementing a “Single European Sky.” In many jurisdictions, airspace regulation is a complex issue that does not rest with just one government body.
Regulatory challenge: guidance documents
Another complicating factor for infrastructure developers may be gleaning the meaning of various government guidance documents. In the United States, for example, the FAA issued in 2022 design standards for vertiports. The FAA produced these standards in collaboration with industry partners, including a virtual “Industry Day” to discuss the draft standards. The standards contain numeric details, such as dimensions for vertiport touchdown and liftoff areas, volumes of airspace needed for approach, as well as information about aircraft weight and load-bearing capacity.
Importantly, these design standards, published as an “Engineering Brief”, are not legally binding, and are intended for interim use while an authoritative document is developed. Therefore, it may behoove a vertiport developer to collaborate directly with FAA before basing design decisions on the elements contained in the design standards. After all, the numerical standards may change as FAA develops its authoritative document. More importantly, complying with the terms of the design standards will not guarantee government permissions. In fact, a complex process involving federal, state, and local authorities (discussed above) will likely need to occur for the infrastructure to receive full permissions.
The success of AAM is dependent partially on the existence of infrastructure to handle commercial operations as soon as 2025. Moreover, this infrastructure will need to be able to handle increase operations as higher density traffic occurs beyond initial launch. As demonstrated here, there are many regulatory factors for infrastructure developers to consider and manage in business planning and to attract investors. This business planning should include recurrent engagement with regulators, state/local authorities, and the community in which they plan to operate, among other considerations.
1 In the U.S., low-level airspace is regulated by both federal and state regulators. The law provides the U.S. federal government with sovereignty over the national airspace, which is delegated to the Department of Transportation and its FAA Administrator. Historically, FAA has exercised exclusive control of the airspace as it relates to aviation safety and efficient management of the national airspace system. In other areas, there has been shared state and federal control. State governments have a constitutionally-protected right to certain so-called “police powers,” which include land use, zoning and safety. It is for this reason, then, that state governments may regulate airspace over critical infrastructure, prisons, and other safety-related buildings, even though the law provides for federal sovereignty over the airspace. Many AAM and UAS proponents would support the FAA’s exercise of exclusive sovereignty over all aspects of airspace, to avoid the need to coordinate with multiple governmental bodies and varying laws across the states of the U.S.