Hi there,

it's been a very active two weeks in the Travel and Mobility Tech sector, especially on the startup investment front.

Quick reminder: Our Deal Section at the end of this newsletter spotlights all the latest industry investments that have hit our radar.

Speaking of investments, our recent study on the investment strategies of top airlines, hotels, mobility providers, and online travel agencies caught the attention of PhocusWire.

In case you missed the piece, here's the full analysis once again.

Now, let's dive back into our ongoing research sagas: the Metaverse Scenario Analysis and the 2024 assessment of Advanced Air Mobility.

We're adding fresh chapters to both of these research babies in today's edition.

Your Lufthansa Innovation Hub Team

Research

AI Investment Trends in Travel and Mobility Tech

In our ongoing research effort to assess the 2024 state of the Advanced Air Mobility (AAM) sector, we've previously explored two critical dimensions:

The technological advancements shaping the industry.
The funding environment characterizing AAM contenders in 2024.

Today forms the third critical factor in assessing the market readiness of the AAM industry: regulation and certification progress.

The Rising Regulatory Narrative

The increasing prominence of regulatory discussions in the media landscape clearly indicates that regulatory compliance and certification are now a pivotal concern for the AAM industry.

Over the past five years, media coverage related to AAM regulation has not only grown but is projected to hit a record high in 2024.

This surge has been largely fueled by the significant regulatory milestones that have been achieved by leading AAM contenders:

Joby Aviation has recently completed three of the five stages of the type certification process, becoming the first Western air-taxi contender to reach this milestone towards commercialization.
Archer is preparing for FAA certification as it started building three type-conforming, piloted Midnight aircraft to be used in for-credit flight testing with the regulator, expected to begin later this year.
Last but not least, Ehang, from China, has already secured full-type certification for its aircraft, which was issued by the Civil Aviation Administration of China.

Without a doubt, regulation and certification have become the center of attention for aspiring AAM contenders and the industry as a whole.

Regulatory Divergence in Advanced Air Mobility

More important than public attention is the actual progress on the regulatory and certification fronts.

Today's AAM regulatory framework is characterized by a varied landscape across major markets, including the United States, Europe, the United Arab Emirates, Singapore, and China.

Each region adopts unique strategies to integrate these new air mobility solutions into their airspace, urban infrastructure, and legal systems.

We have synthesized these variations into a simplified comparative table to illustrate the differences clearly.

Similarly, we delved deeper into the certification progress of individual AAM contenders.

AAM Companies' Path to Market Readiness

Here, it becomes clear that the journey to market readiness is both varied and complex.

The chart below illustrates the certification ranking, which reveals significant disparities among the top players in the AAM sector.

Quite clearly, China's Ehang leads the race, having already secured full-type certification, as previously mentioned.

This achievement positions the company at the forefront of the industry, ready to initiate real-world operations. Close on its heels are AutoFlight, Volocopter, and Joby Aviation, each on the brink of entering the type certification stage.

This critical phase will test their readiness to meet stringent regulatory standards and prepare for commercial deployment.

What do all these insights mean for the AAM industry going forward?

And how do we rate the regulatory progress compared to previous years?

Find out in our updated Advanced Air Mobility Readiness Radar on TNMT.com

Read Article

Research

The Metaverse in Aviation: The Golden Islands Scenario

In our recent exploration of the metaverse's potential impact on the aviation industry, we embarked on an unconventional analysis, employing a "scenario-based approach" to envision the future integration of metaverse technologies within air travel.

Before we dive deeper, let's briefly repeat what we mean by "metaverse": It represents the convergence of our physical and virtual realities, powered by:

Immersion: Utilizing immersive technologies such as Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR) alongside their corresponding devices, it crafts a hybrid reality that intertwines physical and digital dimensions.
Ownership and Exchange of Digital Assets: The metaverse also enables the capability to possess and transact digital and virtual assets within these immersive spaces, facilitating a unique economy of virtual items and experiences.

Our collaborative effort, pooling insights from industry leaders at Airbus, Bauhaus Luftfahrt, and our team here at the Lufthansa Innovation Hub, has led us to formulate four distinct scenarios predicting the evolution of the metaverse in aviation over the next decade until 2035.

Each scenario is crafted to reflect varying degrees of consumer adoption and metaverse consolidation, setting the stage for a range of potential futures.

Focusing on "The Golden Islands"

Today, we zero in on the first scenario: "The Golden Islands."

This scenario imagines a future in which consumer adoption of metaverse technologies remains relatively low and access to metaverse platforms is highly fragmented.

"The Golden Islands" scenario explores how this exclusive version of the metaverse might influence the aviation industry, providing unique opportunities for differentiation and premium services for airlines and other travel providers.

To explore this hypothetical future, let's examine in more detail what characterizes "The Golden Islands."

1. High Entry Costs Limit Accessibility

In this scenario, the price of metaverse devices acts as a barrier to entry.

Currently, the cost of these devices ranges significantly, with high-end options like Apple's Vision Pro, the Vive Focus, and the Varjo VR series reaching thousands of dollars.
This scenario expects prices to rise in the short- to medium-term future, making these immersive devices even less accessible to the general consumer.

2. Specialization and Fragmentation

Such high costs for metaverse devices would serve as critical technology gatekeepers.

As a result, the "The Golden Islands" scenario naturally caters to the wealthier portion of society.
For them, high-end devices act as portals to exclusive metaverse experiences created and curated by luxury brands catering to wealthy consumers.

Thus, we assume the development of niche use cases targeted at high-net-worth individuals rather than widespread metaverse applications.

This group's interest in technology and luxury experiences makes them ideal metaverse users.

With two-thirds of high-net-worth individuals saying AR/VR makes them more likely to buy luxury items, there's a clear demand for unique, high-quality virtual shopping experiences.

Given the emphasis on exclusivity and customization in virtual luxury shopping, we expect metaverse platforms to be highly specialized and fragmented, designed to meet specific product and consumer preferences.

This likely results in a metaverse landscape filled with separate, luxury-brand platforms competing for the attention of affluent users, promising exclusivity and high-end virtual experiences.

So, in this scenario narrative, the metaverse emerges as a niche, luxury experience accessible only to those willing and able to invest in the high costs associated with immersive tech.

Implications for Future Aviation

Considering aviation's track record in deprioritizing the (digital) customer experience, airlines may not be the first to develop sophisticated metaverse use cases.

However, we expect airlines to be followers once the technology is advanced enough to be adopted in other industries.

Particularly premium carriers would find themselves positioned as relatively quick followers, keen on developing consumer-facing applications tailored for the high-end traveler segment.

Why?

The premium travel segment's importance to airlines cannot be understated. During a recent investor day, American Airlines CCO Vasu Raja stated that around 80% of the airline's 2024 revenue will be driven by its frequent-flier program and premium products.
Our exploration of the parallels between airlines and luxury brands underscored the expanding luxury consumer base, which is projected to grow from approximately 400 million individuals in 2022 to 500 million by 2030.

This anticipated growth underscores the importance of travel brands catering to this demographic, a trend that's already shaping airline offerings today.

Airlines are increasingly focusing on enhancing the premium travel experience, from upgrading premium seating to adopting service innovations that cater to the needs and preferences of high-net-worth individuals.
Companies like Scenset and Brevity, which specialize in luxury travel planning, signal the broader "luxification of travel," catering to the expectations of affluent travelers.

This evolving landscape suggests airlines may soon venture into innovative territories, bridging the physical and digital realms to cater to the premium market's evolving expectations.

To make this all more concrete, we delved into two specific outlooks that could define how this future unfolds for the airline industry.

Interested in learning more about these examples?

Then check out our full "Golden Islands" exploration right here.

Read Article

Press Picks

Our Recommended Must Reads

SUSTAINABLE TRAVEL – Google has introduced new features in its Maps and Search to promote sustainable travel. The updates are meant to help users find convenient public transit and walking routes, see alternatives to air travel, and better understand the estimated emissions of flights.
Read more by Business Today

(UN)SUSTAINABLE TRAVEL – Booking.com has conducted its annual global sustainability survey among more than 31,000 travelers across 34 countries, and this year's results indicate travelers have become disillusioned when it comes to sustainable travel.
Read more by Booking.com

AIRLINE FUNDS – The aviation industry must secure an unprecedented level of investment into breakthrough technologies to stay on a realistic path toward its net-zero necessity. To date, only three major airlines have established standalone climate-focused investment funds.
Read more by Sustainable Aero Lab

TESLA VS. UBER – Tesla has teased its upcoming self-driving ride-hailing app, previously called 'Tesla Network', that the automaker is positioning as a Uber competitor. For years now, Tesla has been talking about releasing a ride-hailing app to compete with Uber and now Waymo.
Read more by Electrek

TRIP-PLANNING STARTUPS – A new Accenture report shows nearly two-thirds of travel consumers feel overwhelmed by how much information they have to sift through when making a purchase. Travel entrepreneurs have been pitching new solutions to the problem for decades but without much success.

Most Recent Investment Deals

– VC –

Ramp - The New York-based travel and expense management specialist raised $150 million of Series D-2 funding, co-led by Khosla Ventures and Founders Fund, with additional participation from Sequoia Capital, Greylock, and 8VC. The funding will be used for "the next wave of innovation," including AI integrations for automation, insight extraction, and decision-making assistance.

SWAT Mobility - The Singapore-based AI transportation platform added an additional $3.8 million of funding to its latest funding round from IMC Ventures, Nippon Express, Chubu Electric Power, and others. The funding will be used for hiring and R&D.

Assembly - The Indian travel gear company raised $2.1 million in funding led by Prath Ventures. The funds will be used for hiring and expanding product range as well as marketing and branding initiatives.

Chunguza Travel - The Uganda-based provider of a self-service online travel reservation platform raised $200K in seed funding from undisclosed backers. The company intends to use the funds to consolidate operations, build the team, amplify marketing, and accelerate innovation.

Verne - The San Francisco-based developer of high-density hydrogen storage systems raised an undisclosed amount in funding led by Trucks Venture Capital, with participation from Collaborative Fund, Amazon's Climate Pledge Fund, United Airlines Ventures Sustainable Flight Fund, and Newlab. The funds will be used to accelerate the development of its cryo-compressed hydrogen technology.

– M&A –

QuickBus - The Nigeria and South Africa-based bus ticketing platform was acquired by Kenyan competitor BuuPass in a cash and stock deal. The acquisition will expand BuuPass's partnerships with banks and telcos that offer multiple services, such as API integration features.

Owayy - The Danish glamping brand was acquired by Oslo-based nature-stays marketplace, Campanyon, as the former seeks to redefine the eco-tourism landscape in Europe. The acquisition will enhance Campanyon's presence in the Nordic eco-tourism market by consolidating more than 2,500 distinctive stays in the region.

SnappCar - The Dutch car-sharing platform was fully acquired by AutoBinck Group, a shareholder in the scaleup since its founding in 2011. The deal is meant to enable faster decision-making and eliminate the need for external investments.

Profitroom - The Polish hotel booking engine sold a 65% majority stake in its business to MCI Capital in a $71.5M deal. The funds will help Profitroom expand across Europe, Africa, and Asia.

FTI Group - A consortium led by the US financial investor Certares is taking over all shares in the FTI Group for a symbolic euro, but $135M is to be invested in the third-largest German tour operator. Certares signed the agreement on the takeover of the FTI Group and its financing "and will manage the company in the future."