 So, great podcast today with Bellagie, awesome guy, we talked about aerospace, we talked about disruptive innovation in the future of air transport, which I knew absolutely nothing about, and we talked about urban air mobility, and if you know what that is, you'll one step up on me. Anyway, hope you enjoy the podcast. Hey, it's Lewis. Welcome to the podcast. Enjoy conversations anytime, anywhere. Awesome. And we're live. Bellagie, thank you very much for joining me on my podcast. So, we're at the net. We're doing it downstairs in the lower ground, so a little background noise. A couple of drinks are coming. So apologies if there's any background noise. But yeah, tell us a bit about yourself. You're a great do catch up with you, Lewis. So, I'm Bellagie, I'm a strategy manager. I work for what is called the Aerospace Technology Institute in the UK. And what we do is fundamentally we are a public-private partnership. We work in collaboration with the aerospace industry in the UK and the UK government to support research and development in future technologies for the aerospace sector. And to make sure that we realize the economic impact that the aerospace industry has to offer and that the UK retains its global leadership position in this industry. Funded by? We're part funded by the industry and we're part funded by the government as well. So, it's, as I said, a public-private partnership that works really well. Nice. How did you get into that? So, well, I've always been interested in aerospace right from the beginning. From the start when I was young, I always wanted to be a pilot and actually realized it's quite expensive as an affair to become a pilot. Can you fly? I can fly, but I'm not sure anyone would trust me with their aircraft. So, I started off, you know, I did my high school and then I ended up becoming an engineer. Started my career in the sharp end, working for an airline in the heavy engineering sector and doing, you know, stripped-downs of large aircraft like Boeing 747s and had hands-on experience doing that. I also worked at the front end of the design process of aircraft. I worked for a company that did engineering design services for aerospace, OEMs and majors. So, worked on a series of aircraft like 320s, 330s, the kind of aircraft that we fly every day. Did a lot of modification projects on the engineering front. On those airplanes, then I decided to do my MBA in aviation management. In the UK? I did that in Melbourne, Australia, so in the Royal Melbourne Institute of Technology. And once I did my MBA, I ended up being a consultant working for Fossum Salomon, which is quite exciting. And how was studying in Melbourne? Oh, it was fantastic. Actually, Melbourne's one of my favourite cities and it's very multicultural, very diverse, one of the best cities to live in. It's been consistently rated as one of the best cities in the world to live in. And it was fantastic being a student in Melbourne, so I got exposed to a whole range of activities within the university, the university environment itself was quite fantastic. Although an MBA is not really an easy affair, I got involved in a lot of activities which got me really interested and engaged in that programme. And as soon as I finished that, I had an opportunity to join a consultancy and as an analyst to look at the aerospace market. Back in the UK? That was actually, I got interviewed in Melbourne. I had the opportunity to go to India for that business, although I was working for the European team. And managed to set up a team in India and work with that team in India. And then a year later I actually moved to the UK to run that business. So it's pretty much working with a global client base of aerospace companies. Yeah, yeah. Great. What's going on in aviation at the moment? What's the state of the market? Yeah, well, aerospace is an... Aviation, broadly, is a very, very interesting sector. The sector has a global economic impact of over $2.7 trillion. Wow. $2.7 trillion? Yes, and it contributes to over 3.5% of the global GDP year on year. So it's a quite significant sector. And if I have to throw some statistics at you. Yeah, yeah, yeah. I mean, the sector supports almost half a million jobs globally. Or actually, 62 million jobs globally. Just the airports alone support over half a million jobs. Wow. How's that changed? So it's on the rise. So the sector as a whole is growing, actually. And if you look at the overall growth rates, the industry has grown at an average of about 5% year on year, consistently, despite the economic shocks of 9-11 or the post-economic crisis of 2008. The sector is still consistently grown despite those shocks. Which is partly fueled due to the growing economic conditions in the Far East and APAC. But also because of the established market conditions in the UK and in the West. Because you see a little bit in the news of some airlines going under, struggling. Genuinely, it's still good. Well, airline business is really competitive. As somebody really popularly said, if you want to become a millionaire, start with a billion and start an airline, right? So it is a really competitive business. It's really hard to compete. In the airline business, so you're carrying a whole volume of people and there are few price fluctuations in the market that affect an airline's operating cost quite significantly. And the cost of owning an operating aircraft doesn't come cheap either. So it's a really expensive business to be in. But the ones who got it right have always stayed and made it quite a glamorous industry that it is today. To just give you some perspective on how many people actually take to the skies each day, almost on a daily basis, there are about 10 million people who fly. And there are over 100,000 flights each day globally. And there is about 17 to 18 billion dollars worth of goods being transported by air as well on a daily basis. So as an industry, it's got a huge impact. And if I have to give you some more stats on how many aircraft that are out there, large commercial transport aircraft, there are over 26,000 aircraft flying today. And that fleet is expected to double over the next 20 years. And if you think about that, the current context of airport congestions and everything else, it is quite an exciting industry to be in in terms of how we're going to accommodate that growth. And the poor planet is going to really pay for that, right? Is there anything innovative around fuel and pollution? There is a lot going on in this industry in terms of, I mean, if we think about aerospace in comparison to automotive, I mean, we've seen that a revolution already happening in automotive. As vehicles start, as we have more vehicles on the road, we are thinking about more greener, more environmentally friendly cars. And the same trend is actually following so in fact it's been going on for a lot of years now. And there are two factors driving that. One is we need to make it environmentally feasible to be able to double the number of aircraft and to be able to meet that passenger demand from growing economies and also existing economies. If you're going to double the fleet, that's obviously going to double the emissions and we don't want that to happen. So we really need to be innovative from a technology perspective and also from an operational perspective on how efficient can we get. So technology plays a huge role in this. So how do we invent the next generation of technologies that will allow us to cut emissions, become more efficient in how we fly? It also comes down to how airlines operate. There are efficiencies to be had on the ground, in the air, et cetera, et cetera. So are you flying the right profile so you actually maximize your fuel efficiency? Are you flying the right routes? Are you flying the right type of aircraft? Is your fleet new in comparison to the type of aircraft you operate? So you could be flying really old aircraft which might be fuel guzzlers compared to new airlines today which are much more efficient when it comes to utilizing new aircraft types. So there is a lot that is happening both from an operational perspective and from a technology perspective. But from where I work, I get to do a lot in the technology space and we get to sync our teeth and all the new and exciting technologies that are happening and are being developed in the space including new engine programs, new wings, utilization of new materials to build aircraft substantially reduce the weight of newer aircraft making them more efficient, smart and connected, et cetera. Brilliant. And so you're getting involved from the perspective of funding them by evaluating which ones to fund? Absolutely. So my role within the ATI itself is twofold. So I lead on the ATI's strategic work so in terms of actually working out where the ATI is an organization needs to go, how we establish and work with our industry partners to deliver what we have to deliver as strategic objectives for both the UK and for the industry. And also I work on assessing all the proposals that come to us on the validity of their business case. So what we don't want to do is fund technology for technology's sake and all the technology that we fund needs to earn its way into the market. And it won't do that unless it's actually delivering the benefits it's supposed to deliver both from an economic perspective also from an environmental perspective. Right. And it needs to be the right technologies that will actually benefit the UK in the long run. So my job becomes really interesting in the fact that I get to work with companies who are at the cutting edge of technology development in this sector. Great. And are they startups? Are they to be small businesses that are trying to? I mean the aerospace industry is quite unique and it's set up that there are very large companies which operate in this sector. And the nature of the industry is that it's quite expensive. Right. So most of the technologies on aircraft that we fly today are already operating or designed and developed and are already operating at the edge of physics or limits of physics. Right. So to deliver efficiencies further from there is really difficult. And it requires often if you look at a large aerospace or aircraft development programs they end up being multinational programs. So with the multiple governments supporting it because the amount of cost involved in developing new technologies. The fundamental issues being the need for safety and certification. The nature of the industry is that safety is paramount. Safety beats price, efficiency and everything else. So we really need to be sure that these technologies are deployable on an aircraft. Unlike an automotive where you, even in the automotive industry we've seen that recent incidents where new technology introduction has led to accidents and fatalities and people getting interviews of that. And I don't want to name specific companies who've been doing these tests. We can't afford to do those things in aerospace. It'll be detrimental to the whole industry and the economy that it supports. So it's really important to make sure that regulations are due to and the certification regime that the industry has set itself up to is followed. Which also makes it a real big barrier for really small companies to operate at the whole aircraft level. However, there is a lot of scope for small companies and there is a huge supply chain, global supply chain that supports and delivers large companies who are doing the whole aircraft or engines or systems. And these are not necessarily large companies, right? So these range from small companies to mid-caps who are operating in the sector and the different levels of capabilities from design to actually manufacturing and servicing these products. However, coming back to startups, I think there is a significant scope for startups in this sector. And more recently, this is one of the pieces of work that I've been leading at the ATI is to understand how we can better support startups. I think there is a need for startups because the industry is quite used to working in a certain way. And if I can be bold enough to say that, it's not necessarily the fastest and most agile way of dealing with the technology challenges of the future. And with the scope for innovation and the need for innovation in the sector, I think there is tremendous opportunity for startups to come and change the way things work today. And this will, this can range from areas such as autonomy to connectivity to newer materials to actually startups who are actually operating in the tech industry. And there are a lot of startups in the automotive sector, for example, who can find their way into aerospace. And there are significant new areas that the aerospace industry is exploring. We've seen the electrification of cars and automotives, for example, and the same trends following suit in aerospace. Well, did you see at some point there'll be electric... Absolutely. And the whole industry is actually positioning itself to move towards that. And electrification in aerospace, for me, is not something new, I think there is a kind of revival of a lot of activity in that space today. Right. If we look at what the industry needs to achieve in terms of environmental targets in the next 20, 30 years, incremental innovation is not going to really deliver that change. So the industry kind of understands that there is a huge focus on actually achieving a significant step change performance from both technologies and operational improvements to actually deliver that efficiency. And this is where I think there is a huge scope for startups to actually come in and introduce new technologies, new business models and new processes. And are these startups originating from some of the universities? I mean, there is a huge university opportunity in the UK and elsewhere as well. So a lot of startups obviously are originating from universities in the UK. Obviously, there are a lot of startups from within and I spin off from universities. I think there is a huge base of startups that the industry can tap into to actually deliver the technologies that are required for the future. When it comes to startups, there are some specific challenges as to how we actually encourage startups to work in aerospace and that's actually the piece of work that I alluded to in terms of what I've been looking at at DATI for the past six months. And this goes back to how we fundamentally engage, how the industry fundamentally engages with startups. As I said, it's a very traditional industry. It's got its own rules and ways of working and product development and technology development. But the industry I think is waking up to the fact that there is actually a lot of benefit in working with startups and that everything that needs to be invented doesn't have to be invented by the large companies. Because startups do start from a different base and they are much more agile and have a very much problem-solving oriented way of working, which I would say the industry or the incumbents in the industry are not necessarily set up to do. In a way, they are actually victims of their own scale of operations. Which also because of their stakeholders who measure them by their rate of returns and short-term returns and how large companies to operate that way. True. I'm excited about driving to the moon soon. SpaceX So that's an example, right? So what SpaceX is doing to the space sector could be, we could see similar trends in the aerospace sector, right? With startups actually coming in and changing the way the industry works. They need to be well funded though, right? Absolutely. So funding is one of the fundamental challenges, so I was going to come to that. So one is actually identifying which startups can work with aerospace companies. Established aerospace companies both in the UK and elsewhere. And if we look at companies outside of the UK, you take Boeing for a personal example, they've identified this trend and they've started up a corporate bench capital arm called Boeing Horizon X which actually proactively goes out there and looks for startups that they can actually work with technologies that they can actually leverage and apply back into the business of actually building airplanes. Similar ventures have been started by other companies, so Airbus ventures in France and in Silicon Valley. There is scope for such ventures in the UK. There is scope for cash to be applied to the sector. Again, aerospace is not necessarily the most attractive sector for venture capitalists or private equity investors. The reason being the high barrier is to entry the long time to market and the amount of time it actually takes to recover from your investments or the benefit of your investments. However, that's changing as I said. The development cycles are sharpening with startups coming into the picture. There is a huge scope for a lot of investments to materialize sooner than they normally would in this sector. So both from a funding perspective but there is also an opportunity for somebody like the ATI to actually connect startups with existing companies in the aerospace sector both in the UK and elsewhere to actually realize breakthrough technologies of future rights. To give you an example, I was just talking about autonomy, electrification. These are areas where there are a lot of startups working in other sectors like automotive or you take any other transportation sector. Even companies working in the tech industry. Software industry. At airport operations, for example, there is a huge scope for applying software and leveraging digital and data-enabled capabilities to change how passengers travel in the future. And if we can actually squeeze more efficiencies out of airport operations or how an airline operates it equates to dollar value for both the airlines and airport operators, for example, and which means we're going to free up capacity which means we're going to encourage the growth of the sector because the aircraft manufacturers end up selling more airplanes. And when there is a demand it needs to be met and we can't have current infrastructure constraints or operational constraints really constrain the growth of the sector. So there is huge opportunities for us to leverage what's being developed in other sectors and especially by startups and find a way to apply that in aerospace and aviation will probably. Brilliant. And do you get in but we talked a bit about it before we started recording urban air mobility. So is this the area of flying taxis and... It's very exciting, right? Absolutely. We've seen car sharing and carpooling and shared mobility as a concept really being talked about in automotive today but I think that's going to be the future for aerospace as well. Some people would say if you want to know where aerospace is going in the next 10 years see where automotive was about 10 years ago. So I think there is a huge opportunity for business model transformation. But the thing with cars though is most people have one car, maybe two. Obviously aeroplanes you share already, right? Absolutely. So how do you see it mirroring? Okay, so let's take the automotive industry as an example. So you talked about car ownership but when we talk about ownership trends that's changing as well. So talking about future generations and younger generation of people it's becoming less and less attractive for people to own cars. So that's absolutely what's actually driven the growth of the likes of Uber or the other ride sharing companies world over. 10 years ago you wouldn't have thought about Uber, right? So Uber is not even 10 years old. And it's market caps already bigger than that of a BMW which is hundreds of years old. So if you take the examples of companies like Uber in the automotive space, they don't really own cars or make cars, they're actually offering a service which is ultimately what you want. And what you and I want is not necessarily have a car which I would probably drive in the weekends, we all work in central and especially urban residents like us. We're not going to appreciate having a car that we can't really use most of the time. And I think that's recognized world over, right? So with more than 70% of the population going to live in cities in the future people are shifting towards more ride sharing and share mobility models. And even when it comes to owning cars people have moved towards leasing them rather than buying them. How many people really own cars anymore? That gives you the flexibility to upgrade it gives you the flexibility to use what you want to use when you want to use it and actually derive more value out of an asset which is actually a depreciating asset. So if you think about the same from an air travel perspective or more broadly a transportation perspective there is a huge opportunity for integrated mobility so I really don't want to worry about I need to book a taxi to go to Heathrow, I need to book my airline to get separately and then I'm going to have to find out how I go from where I land to where I need to get to on the other end. So the future is actually integrated mobility solutions so I really have to think about just one system which allows me to go from my sofa at this end to the sofa on the other end. So I really don't want to worry about all the different modes of transport that I need to book individually. If you think about air travel in that context it's changing as well so it's right for distribution. Do you think you'll be able to get from your couch to a friend's couch in Melbourne? Absolutely. Do you think you'll be able to fly in taxi? Absolutely. That's the ultimate dream, right? So if you think about mobility for me it's often quite easy to go fly from Heathrow to somewhere and come back then actually it is to get back from Heathrow to where I live which is pretty much in London. So if you think about the challenge the challenge really is the last mile challenge, right? So there's the same issue whereas on the other hand when you're on the line and you landed at Heathrow and from Heathrow you had an urban taxi waiting to pick you up and drop you at your place in about 15 minutes and it's not even a challenge for Londoners, right? If I were somebody living in Northampton and I flew into Heathrow it's going to take me another three hours to get to where I live but I really don't want to I really won't enjoy that commute and probably multiple modes of transport, right? It's not going to be a single journey and we don't have to find a way to go from Heathrow to somewhere else from where again I catch a train, go to Northampton then take a taxi from Northampton to where I actually live. So if you think about the cost of that journey it becomes much more expensive than your air travel position. But are our cities built for this then? I think there is a lot that we can do with technology especially with automation and autonomy. It's going to a level it's a lot of the cars today or at least partially autonomous different levels of autonomy by its driver assist next generation of cars are likely to become more autonomous. Do you see them flying around our tall buildings in the city? Absolutely, I think the technology kind of already exists but not to the level of maturity that we need to be confidently able to apply in an urban environment. But I think the initial application of flying vehicles will be in very dedicated airspace which might not be in urban environments but more point to point city to city but beyond urban air environments but eventually the technology will mature that regulators will have the confidence to actually apply it to urban airspace and that's the hope and that's the belief with which the industry is investing in it. I think there is a lot of exciting stuff going on in this space from an ATI perspective we've led a proposal into government now called the Amy Johnson Challenge which is all about developing a forward thinking aviation system in the UK which will allow the existing companies the airport operators and everybody else to come together and create a system within which we can develop such and actually test and develop these kind of technologies for the future. And who are the key players in this? I mean there are a lot of startups in other parts of the world like Lilium for example there is Oolocopter and Ehang from China and even Airbus testing their own flying taxi platform and Uber is definitely working on their own platform called Elevate they're working with Embraer to build the vehicles themselves and they're working with a range of other companies development technologies that will feed into it there are also a lot of UK companies who are looking at venturing into this one of them they were at the Farnborough Airshow recently and they actually unveiled a concept flying taxi which actually got a lot of traction and interest from a whole range of people from across the society. How far do these things fly? So sorry about that so terms of height it's yet to be determined depending on which kind of fruits they are applied to right so if you're flying in an urban space you're going to be flying much lower than class A airspace you've got to think about how high you fly so it's not yet determined as to what the say flying height for these things will be it really depends on the environment in which they operate Awesome I'm really looking forward to having a flying taxi taking me to SpaceX going to the moon coming back to town perfect good thank you very much for joining me on the podcast thank you really interesting oversight into the aerospace industry and what's going on let's reconnect soon so we can take another check of what's been going on very exciting times thanks a lot hey folks thanks for listening don't forget to subscribe in all the usual places