Name: Deurbanization Rising: Covid-19, Remote Work And Electric Aviation Will Reshape Living Patterns
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Deurbanization Rising: Covid-19, Remote Work And Electric Aviation Will Reshape Living Patterns

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...© 2022 Forbes Media LLC. All Rights ReservedThis site uses cookiesContinue to SiteTo give you a great browsing experience free of charge, this site uses cookies. Cookies help us personalize content and ads, provide social media features,track your preferences, and analyze traffic. Forbes may share this information with its advertising, analytics, and social media partners, who may use itwith information you have provided to them in connection with their services.For more information:&nbsp;To consent and proceed, click "Continue to Site."Nov 9, 2020,Between 2006 and 2019, remote work expanded 170% to the point where about 8% of people with jobs worked remotely. By August 2020, the Covid-19 pandemic helped drive that figure to 20%, according to the . Global Workforce Analytics believes percentage of telecommuters will hit 25% to 30% by the end of 2021.&nbsp;According to , 99% of employees who work remotely want to continue doing so at least to some extent. It is not surprising given the large cost savings for individuals and the perceived improvement in flexibility of working hours. Businesses themselves have a huge opportunity to save on real estate costs and 94% of employers believe the productivity of their workers has been or has working from home.San Francisco and other dense urban centers have seen rents decline rapidly under this pressure while rents and housing prices in the suburbs have risen. The pandemic and the ease of videoconferencing applications like Zoom, BlueJeans and Microsoft Teams helped to accelerate this trend, but electric aviation will lead to profound changes in the urban landscape in ways that few expect.The Limits of Commuting by AutomobileThe push and pull workers experience between urban core and the suburbs is nothing new. , argues that commuting technology has defined the shape of cities since the days of ancient Rome. Bloomberg argues that a subway- or streetcar-based city could support commutes from about 50 square miles of land whereas an automobile-based city could support commuters from over 1,250 square miles of land.&nbsp; As American cities became automobile-centric the supply of land increased up to 25 fold and made housing less expensive. In this sense, American suburbs exist because fast, low-cost transportation in the form of trains and then cars, developed that enable people to live at a distance, while still being connected to urban centers.MORE FOR YOUIn some respects, nothing has changed. All other things being equal, housing prices (and land prices) tend to fall as . America remains a relatively sparsely populated country with enormous amounts of cheap land. For the last 70 years, cars offered the most competitive form of transportation for commuters who want cheaper space and new electric vehicles like the Tesla Model3 will only make them more competitive. In 2016, 85.4% of people commuted to work via and another 5% via public transportation. Walking, biking and working at home made up most of the rest. And why not? Despite the sustainability challenges ICE cars create and traffic on the daily commute, autos take relatively direct routes, are cheap at about (at average occupancy of ), have high reliability and offer workers tremendous flexibility.&nbsp;In other respects, everything has changed. By the time the pandemic started, auto-based transportation had begun to hit its limits with . Cars couldn’t drive fast enough and generated too much congestion to provide access to new undeveloped land in many urban areas. In response, urban planners saw increased density and public transportation as the solution.&nbsp;The remote working world will tip the incentives back from proximity toward space. On the one hand, remote work creates more demand for space as people get tired of running meetings from their laundry room and businesses demand more professionalism from home. On the other hand, remote workers will receive less value from proximity to the office. If the commuter only needs to visit the office once or twice a week, his daily commute time and cost could double and he will still end up spending less time and money than if he had a daily commute. The only thing that is missing — a transportation mode that can move people faster than 60 miles per hour.Hybrid-Electric Aircraft, The Car’s New Commuting CompetitorFew people have a daily commute to their office by air today. Big airports are too far from most homes and workplaces. It takes too much time in the airport and too much time in traffic to and from the airport to make them practical for commuters. For example, there are only five major commercial airports in the greater Los Angeles area while forty-three smaller airports are largely unused by commercial airlines. It can take an hour to drive from the center of Santa Monica to LAX in traffic, but less than 10 minutes to drive to Santa Monica Municipal Airport.&nbsp;In addition, smaller aircraft that can fly into tertiary airports today cost too much to compete with cars for commuter traffic. Total costs for a Cessna Caravan could exceed 75 cents per seat mile to operate on a mid-range route. So, a thirty-mile flight could cost the carrier $22.50 (or more for such a short flight) for which they might charge $33 one-way to the passenger. This doesn’t include the cost of getting to the airport and then from the airport to work. Pretty expensive for a trip a car could make for about $11.&nbsp;Finally, smaller aircraft often struggle to offer the kind of reliable service we take for granted from commercial aircraft like the Boeing 737.All of these things are about to change with the introduction of hybrid-electric propulsion systems for light aircraft from companies like , and . Although estimates vary and a material difference in savings will exist between new aircraft designs and retrofits, hybrid-electric aircraft could take direct operating costs down by half and total operating cost down by a third. This could push the cost per average seat-mile (CASM) in a hybrid-electric aircraft into the $0.30 per seat mile range, below the cost to operate a car for the same distance.While the thirty-mile commute will probably stay in the domain of cars as the physics of putting an aircraft in flight takes a lot of energy, hybrid-electric aircraft are compelling options for 50- to 150-mile commutes. These smaller aircraft offer the potential for more direct routings than commercial aircraft because they can fly into tertiary airports like Palo Alto in the Bay Area or Santa Monica in Los Angeles. Occasional commuters who only visit the office 1-2 times a week could find this particularly compelling.&nbsp;Let’s compare the commute costs for Tracy, a potential air commuter location in California’s central valley, and Hayward, an East Bay suburb of San Francisco, to Palo Alto, California.&nbsp;The distance from Tracy to Palo Alto is roughly sixty miles. A one-way hybrid-electric plane trip could cost the airline $18 and the airline might charge $25. If you were commuting to the office twice a week, this would cost about $100/week. Add in another $40/week for the drive to the airport, parking and a car-share to work and the commuting bill is about $140/week. The distance from Hayward to Palo Alto is twenty-two miles.&nbsp;A daily car trip would cost the commuter about $81 a week in auto-related costs. Add in $10 parking a day and you have a commuting bill of about $131 a week. Fairly similar costs.&nbsp;&nbsp;Commuters can get in and out of these airports quickly and they rarely suffer the kind of congestion that often delays flights in large commercial airports.&nbsp;With a ten-minute drive on each end, 20 minutes in the airport at smaller terminals, and a 30-minute total flight time the multi-modal commute from Tracy to Palo Alto is an hour each way without the variability of traffic. You would spend 4 hours and forty minutes commuting if you went to the office twice a week. Car traffic has high variability in times, but assuming the median time for the 22 miles morning commute from Hayward to Palo Alto, a commuter would spend an hour and twenty minutes in the car each day or six hours a week. Advantage aircraft.New flight control systems from companies like and others, will increase the reliability and safety of part 135 fixed wing aviation and should increasingly reflect the impressive safety record of commercial aviation. So, for the air commuter, the chances of delay and unpredictability should decline and safety should improve — a significant advantage of flying vs. driving.The capping argument is of course the cost of space. It is always hard to compare housing costs in two different localities as distance from the urban core is not the only driver of housing pricing. Leaving aside the systemic studies of these issues (including the one listed above), a quick look at Zillow shows the average home value in Hayward is 27% more than in Tracy and the average home value in Palo Alto is 427% more than in Tracy.The Network and the ImplicationsThe continued growth of remote work and the availability of&nbsp; faster, lower-cost long-distance transit opens up the possibilities for longer-distance commutes with limited amounts of weekly travel time and cheaper housing. The remote workers, desperate to escape videoconferences in their laundry rooms, will want the space. Work could change materially with workplaces looking more like meeting hubs for people that gather from a larger region than a traditional office. These sorts of changes could make work relationships and social relationships more regional further driving aviation demand. As the flywheel starts to spin, people will start to spread out. Developers will build new style offices meant to permit in-person meetings close to tertiary airports making longer distance commutes easier.&nbsp;College-educated workers, who work from home at almost double the national rate, will lead the way. You can already see at the top end of the income scale even prior to the introduction of cheaper forms of air travel. As high income commuters move further from the urban core, they will pull service jobs with them. The movement will reduce congestion in urban areas, further reducing proximity benefits and creating property utilization issues in the urban core (much like the car did in the 1970s). These trends will put pressure on urban property values and rents and support suburban property values and rents. This during these first months of the pandemic when rents in thirty core cities have declined by 5% while suburban rents have increased by 0.5%.These new ‘suburbs' will look quite different from old.&nbsp;Fixed-wing commuter service will create a new kind of regional carrier – a super-sized Cape Air, if you will, with the scale to drive increased operating efficiency. These airlines will build operations around tertiary airports 50-150 miles from the major urban centers with high frequencies and upgraded terminal facilities. In a kind of reverse hubbing scenario, they will build scale in each regional tertiary airport by running routes to multiple airports in the urban center.&nbsp;They will fly smaller aircraft with high operational tempo and asset utilization and focus on low-cost operations because they will focus on serving people spending their own money to get to work.How many people might this system move? It doesn’t seem unreasonable that 2-3% of the population could commute in this way medium term with a higher percentage over the longer term. people live in the largest metropolitan areas in the US, so this would imply 2.5MM to 3.7MM long distance air commuters. The Bay Area has 4.7MM residents. If two percent of the population commuted this way, it would represent 10% of all (current) remote workers and 94,600 air commuters total. At two round trips weekly per remote worker, the Bay Area would need close to 350 19 seat aircraft to support the commute. Airports operational tempo would likely represent the biggest bottleneck and perhaps noise could create issues for a reliable commuter service. A large number of fixed wing operations in a controlled airspace would probably also require advances in air traffic control, safety and aircraft reliability that support a commuting environment.&nbsp;Nationally, if two to three percent of the workers in the top 20 metro areas commuted via air, it would create a $12-18B market for commuter air services. Once deployed at scale, this type of commuting model will lead to regional clustering of smaller cities connected by air to the urban centers and greater regional integration rather than the more contiguous development based on highway systems that we see today.Yet, these trends will also leave many social questions uncertain and unanswered. Will these changes be jarring and disruptive? Or will these changes integrate smoothly to ease the significant social issues of congestion and housing affordability? Will this type of mobility transformation lead to greater integration of small-town and rural America into the urban core and vice versa? Or, will we see islands of prosperous gentrification in a sea of struggling rural and small-town communities?&nbsp; Will this transformation hollow out the urban core? Or, will it make the core stronger by broadening its catchment area? Will it increase geographical separation of college-educated knowledge workers and the rest of society or create greater social integration as elements of those groups move into historically less prosperous areas? Will it break up the power of and financial hubs like New York or simply extend their reach?&nbsp; As the technology develops, we will have the opportunity to shape the answers to build a better society.As electric aviation rises, our society will build on a long history of urban development to break the historical suburban paradigm and create a new kind of clustered regional development that reduces housing costs while increasing regional social cohesion.&nbsp;to your inbox with the latest insights from experts across the globe.I started my career in manufacturing software in Silicon Valley. After receiving an MBA from Wharton in marketing and management, I joined Bain &amp; Company. There I participated in both the aviation practice and auto practice and led both practices at various times. In 2004, I co-founded Volaris, Mexico’s largest domestic carrier, where I remain on the board. Volaris went public on the NYSE in 2013. I also co-founded &nbsp;DiamondStream Analytics a travel marketing, business intelligence and data analytics provider and have held the CEO and COO roles at two other technology companies in the marketing and analytics space. I am currently Chairman of Stellar Labs, a software company focused on global distribution technologies for private aviation. Via DiamondStream Partners, I invest in aviation and travel businesses that seek to stimulate demand for travel services, or facilitate the growth of travel markets.Loading ...{{^loggedIn}}Sign in here{{/loggedIn}}You've reached your limit of free articles.&nbsp;&nbsp;&nbsp;to continue reading.Subscribe to continue reading.SubscribeSubscribeSubscribefree articlesLearn morefree articlesSubscribefree articlesSubscribefree articlesGet unlimited accessShare© 2022 Forbes Media LLC. All Rights Reserved.

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Deurbanization Rising: Covid-19, Remote Work And Electric Aviation Will Reshape Living Patterns

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