Yin He Zheng Quan·2024-04-28 12:49Summary of Low Altitude Economy Conference Call Industry Overview - Industry: Low Altitude Economy - Definition: The low altitude economy is a comprehensive economic form driven by various low-altitude flight activities involving manned and unmanned aircraft. General aviation is the main industry, with drones being the leading sector within it. Low altitude typically refers to airspace below 1,000 meters, extendable to 3,000 meters based on regional characteristics and needs [1][3][4]. Key Insights - Growth Potential: The low altitude economy is expected to become a new engine for national economic growth, with significant policy support. In 2023, the scale of China's low altitude economy reached approximately 500 billion yuan, projected to grow to 1.5 trillion yuan by 2025 and 3.5 trillion yuan by 2035, reflecting a compound annual growth rate of about 8.8% over ten years [1][4][5]. - Policy Support: The low altitude economy has been included in national planning documents, with 27 provinces incorporating it into their 2024 government work reports. This indicates a strong push from local governments to develop the sector [2][13]. - eVTOL Development: The eVTOL (electric Vertical Take-Off and Landing) industry is expected to flourish, mirroring the development path of the new energy vehicle sector. The government has set timelines for pilot projects by 2025 and commercial operations by 2035 [1][4][5]. Regulatory Environment - Regulatory Changes: New regulations are being implemented to streamline the approval process for low altitude operations. The Civil Aviation Administration of China (CAAC) has introduced a classification system for airspace management, which is crucial for the development of the low altitude economy [6][10][21]. - Certification Process: The certification process for eVTOLs involves multiple stages, including Type Certificate (TC), Production Certificate (PC), and Airworthiness Certificate (AC). The TC process can take around three years, with eVTOLs currently in the exploratory phase of certification [21][23][24]. Regional Developments - Pearl River Delta: Cities like Shenzhen and Zhuhai are leading in low altitude applications, leveraging their existing drone and electric vehicle industries. Shenzhen aims for significant growth in drone operations, targeting over 300 million commercial flights by 2025 [15][16]. - Yangtze River Delta: Shanghai is focusing on building an industrial cluster around eVTOL manufacturing and operations, with several leading eVTOL manufacturers based in the region [18]. - Hainan Province: Hainan has launched the first national low altitude airspace map, designating 83% of its land area as suitable for drone operations, setting a precedent for other provinces [19]. Investment Opportunities - Market Potential: The low altitude economy is seen as a blue ocean market with potential for significant investment returns. The integration of drones in logistics, emergency services, and tourism is expected to drive growth [2][4][5]. - Emerging Applications: The combination of low altitude operations with logistics, emergency rescue, and tourism is gaining traction, with various pilot projects underway in cities like Guangzhou and Shenzhen [19][21]. Risks and Challenges - Regulatory Risks: Changes in regulatory frameworks could impact the growth trajectory of the low altitude economy. Additionally, unexpected accidents could hinder development [1][21]. - Infrastructure Development: The establishment of adequate infrastructure for low altitude operations remains a challenge, necessitating further investment and planning [4][10]. Conclusion The low altitude economy is poised for rapid growth, supported by favorable policies and technological advancements in eVTOL and drone applications. However, careful attention to regulatory developments and infrastructure needs will be crucial for realizing its full potential.