As we make our way into 2024, one concept stands out prominently: the "low-altitude economy." Spurring interest and investment from various stakeholders ranging from local governments to enterprises and venture capitalists, this burgeoning industry has garnered significant momentumThroughout the year, over 20 provinces in China unveiled action plans targeting the development of this economic sector, resulting in the registration of more than 7,000 new companies and the deployment of industrial funds accumulating to the tune of hundreds of billions of yuanThe stock market has also caught wind of this trend, with at least 38 companies in the A-share market associated with the low-altitude economy experiencing growths exceeding 30%, and certain high-profile stocks even doubling in value.

Similar to land and sea, the skies represent a vast, untapped resource, and the pursuit of developing new opportunities within this aerial realm is an inevitability

In recent years, various usage forms of aerial space below 3,000 meters have gained tractionFor instance, agricultural drones for pesticide applications and helicopter transport have become commonplaceYet, the past few months have seen an accelerated explosion in the low-altitude economy's developmentWhat has catalyzed this rapid upsurge?

The most apparent driving force is a robust policy push from the governmentAn adequately extensive industry chain coupled with strong synergistic capacity positions the low-altitude economy as a potential "new growth engine." It intertwines advanced manufacturing on one end with emerging sectors like new consumer trends, smart cities, and tourism on the otherThis sector is characterized by its heavy reliance on capital, innovation, and skilled labor, resulting in enormous market demands across the aviation manufacturing space, operational services, and infrastructure development

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There lies a vast landscape of opportunities, with predictions suggesting trillions of yuan in growth potential and massive job creation.

The emergence of new growth avenues often arises from the need for novel businesses, particularly when traditional sectors like real estate hit maturity, necessitating a pivot towards cultivating fresh economic stimuliRecent years have seen the rollout of various economic models, such as "first-off economy" and "silver economy," with the low-altitude economy being no exceptionAt the heart of this policy blitz is the aim to stimulate new consumption and investment from both supply and demand perspectives, incentivizing advancements in technologies, products, and innovative scenarios.

Of course, while policies are actively enabling this trend, they are also responding to prevailing factors in the industrySignificant strides have already been made within China's new energy vehicle sector and the aviation supply chain

Remarkably, around 70% to 80% of the components needed for emerging air mobility units, such as air taxis or eVTOLs (electric Vertical Take-Off and Landing aircraft), overlap with those found in electric vehiclesThe advancements made in battery technologies, reliable electric motors, automated controls, and comprehensive charging infrastructures from the electric vehicle industry can effectively be leveraged for the low-altitude economyAdditionally, the domestically-produced C919 aircraft has paved the way for talent and technological knowledge in aircraft engineering and safety, essential for the development of air mobility solutions.

When compared to more developed nations like the United States, China's general aviation and airport infrastructure may seem limited; however, there lies an inherent advantageThe country's late arrivals to the low-altitude sector provide an opportunity to leapfrog certain stages of development and expedite the race towards establishing "aerial cities."

Yet, while the prospects of the low-altitude economy appear bright, its intrinsic characteristics indicate that it is not a quick-return industry

At the initial stages of development, substantial investments are required for aircraft R&D, material procurement, production, and certification processesEven upon reaching commercial viability, significant funding—often in the hundreds of millions or even more—remains essentialRecent reports suggest that more than half of publicly-listed companies tied to the low-altitude economy have not realized profit growth, with many core operations still operating at a lossThis paradox of soaring enthusiasm juxtaposed with challenging revenue realities is expected to persist for some time.

In contrast to the electric vehicle industry, the air taxi domain encounters numerous regulatory hurdles before it can achieve full-scale commercial flightKey prerequisites include obtaining certification from the Civil Aviation Administration of China (CAAC) for type conformity, production, and airworthiness, as this forms the foundation for widespread commercialization

Furthermore, air routes and operational frameworks are not readily available; opening airspace and establishing flight paths is a gradual process, requiring initial pilots in designated low-altitude economic zones before they can be expanded safelyAdditionally, with limited takeoff and landing sites and inadequate geographic mapping, positioning, navigation, and communication facilities, the industry's foundational infrastructure resembles the call for "building roads" before expecting prosperity—an analogy that holds true in the skies as well.

The confluence of such factors outlines that the ascent of the low-altitude economy is a marathon rather than a sprint, calling for patience from all involved partiesThis industry needs patient investors, who can adopt a long-term outlook, dedicate themselves to technical innovation, product enhancement, and consumer outreach to accelerate the accessibility of aerial services