Low Altitude, High Ambition

Volocopter, a pioneering German company in the electric vertical take-off and landing (eVTOL) aircraft sector, recently filed for bankruptcy, drawing significant international attention. Founded in 2011, Volocopter was hailed as a leader in the emerging air taxi industry, benefitting from technological breakthroughs and substantial international investment.

The reasons for Volocopter’s collapse, analysts suggest, include a lack of funding, cumbersome regulatory processes, and insufficient policy support. This bankruptcy underscores the ongoing problems in the eVTOL industry, which still faces challenges of technological development, infrastructure, and business model innovation. Volocopter’s collapse serves as a cautionary tale: Technical prowess alone is insufficient for success.

Air taxis, envisioned as the future of transportation in congested urban environments, are now central to the rapidly evolving low-altitude economy. This sector, regarded as one of the most futuristic and visually striking, is seeing global competition heat up. In the US, companies like Joby Aviation and Archer Aviation are pushing forward, while China is home to notable players like EHang and AutoFlight. Other prominent players include British eVTOL bus producer Sora Aviation and SkyDrive from Japan.

Despite the clear market potential, especially in urban centres plagued by traffic congestion, air taxis face significant barriers to large-scale adoption. High costs and the vast infrastructure requirements make widespread commercialisation unfeasible in the short term. Without continued financial backing, many companies in the sector will face immense pressure.

Volocopter’s bankruptcy is not an isolated incident. German eVTOL startup Lilium also succumbed to financial difficulties and filed for bankruptcy in 2024. The collapse of these two once-promising firms highlights the numerous challenges European companies face in commercialising low-altitude technologies.

Aware of the value of the sector, Gerald Wissel, head of Germany’s Association for Unmanned Aviation, has called for more national support. He cautioned that if Germany does not act swiftly, it risks repeating the mistakes of losing its competitive edge in fields like solar energy and artificial intelligence. Then the jobs and supply chains will be taken by China and the US, he warned.

China’s advantages

On the global stage, China has notable advantages when it comes to developing the low-altitude economy, including eVTOLs.

In terms of technology, China ranks among the global leaders in drone research and development, equipment manufacturing, and next-generation communication technologies. By 2023, China had registered over 1.26 million civilian drones, the highest number in the world, and was home to approximately 19,000 drone companies, including major players such as DJI and Xpeng Aeroht.

Additionally, China boasts significant advantages in key component technologies, with global leadership in areas such as batteries, flight control systems, and aviation materials – crucial sub-sectors for the development of low-altitude aircraft. 

The country’s low-altitude economy industrial chain has already taken shape, with a complete manufacturing system in place. This includes raw material supply, software design, key component manufacturing, assembly, and service support. Along the industrial chain for drones, for example, China is especially strong in the production part, with raw materials, parts, and complete assembly accounting for around 70 percent of the global total.

Local governments across China have also been proactive in promoting the low-altitude economy. Over 20 provincial-level regions have introduced policies to support its development, with 10 provincial-level regions, including Beijing, Anhui, and Jiangxi, having earmarked a combined 100 billion yuan ($13.8 billion) in funds to support the research, development, and operation of low-altitude economy projects, further strengthening the sector’s industrial foundation.

Challenges ahead

Despite the solid foundation, several challenges need to be overcome for a sound development of the low-altitude economy.

The first and foremost challenge is the insufficient infrastructure. While the number of general aviation airports has increased in recent years, their overall scale remains low. By the end of 2023, there were only 449 registered general aviation airports in China, compared to over 4,000 public general aviation airports in the US. The distribution of airports is uneven, with many regions lacking the infrastructure necessary for the low-altitude sector to thrive. The network infrastructure to support low-altitude perception, detection, and communication systems, which are essential for the safe and efficient operation of low-altitude aircraft, is also not fully developed.

There is also a lack of mature business models that can provide stable profit. Low-altitude technologies are mostly applied in sectors like agriculture, tourism, short-distance delivery, medical aid, and disaster relief. While promising, these applications currently account for only a small fraction of the market. For instance, in 2022, the total flight hours of general aviation aircraft in China amounted to only approximately 4.5 percent of that in the US.

The consumer demand also remains low. Compared to the US, where private, business, and leisure flights account for around 65 percent of total flight hours, China’s general aviation is predominantly focused on industrial, agricultural, and public services, which make up more than 80 percent of the market. Private and tourism flights account for only about 18 percent, with less than 10 percent of general aviation routes operating year-round.

Recent progress

Recognising these challenges, China has launched plans to support the development of the low-altitude economy. The plan on the innovation and application of general aviation equipment released in March 2024 sets out key goals for the sector’s development. By 2027, the plan aims to achieve significant advancements, including a marked improvement in China’s general aviation equipment supply and innovation capabilities, the establishment of a modern foundational support system, the formation of an efficient and integrated industrial ecosystem, and the commercial application of general aviation equipment in urban air transport, logistics distribution, emergency rescue, and other fields.

By 2030, China plans to establish a new development model for the general aviation industry, one that is intelligent, sustainable, and fully integrated into daily life and production. The sector is expected to become a powerful driver of the low-altitude economy.

The year 2024 already saw major progress for China’s low-altitude economy. Key milestones include the implementation of the State Council’s Interim Regulation on the Administration of the Flight of Unmanned Aircraft on 1 January 2024, which provides the legal foundation for drone operations in China’s airspace. In May 2024, Guangdong Province introduced the first local government policy promoting the high-quality development of the low-altitude economy.

“These policy measures aim to create a favourable environment and ensure the successful promotion of the low-altitude economy,” said Luo Jun, executive director of the China Low-Altitude Economy Alliance, an industry think tank established in August 2024. 

Throughout the year, various government bodies, such as the Civil Aviation Administration of China and the Ministry of Industry and Information Technology, established dedicated departments to promote the development of the low-altitude economy.

These initiatives show China’s strong commitment to developing its low-altitude economy. With active involvement from all levels of government and industry, China is poised to rapidly advance in this sector and play a significant role in shaping the global industrial landscape.