Huaxi: The prospects for low-altitude economic development are broad, and the progress in application and commercialization is accelerating.

Huaxi released a research report stating that low-altitude economy, as a key force driving economic structural transformation and upgrading, is expected to become a new engine for China's economic growth with broad prospects for development. The continuous progress of airspace reform, along with measures taken by the National Air Traffic Control Commission and the National Development and Reform Commission, are helping to address industry bottlenecks and provide support. Central and local policies are accelerating, with more low-altitude pilot cities expected to increase, thus improving airspace utilization. The application scenarios are constantly expanding, and it is estimated that by 2035, a market of over trillions of yuan will be formed. Significant investments in low-altitude infrastructure, exceeding billions of yuan annually are expected. Key points from Huaxi include: - Low-altitude economy helps drive economic structural transformation and upgrading with huge market potential. According to the National 3D Transportation Network Planning Outline, the market size of China's low-altitude economy industry is expected to exceed 6 trillion yuan by 2035. - Airspace reform continues to progress, providing strong support for the development of low-altitude. In December 2023, the National airspace commission established the "National Airspace Basic Classification Method" dividing China's airspace into two levels and seven categories; In December 2024, the National Development and Reform Commission Low-Altitude Economy Development Department was officially launched, responsible for formulating and implementing the strategy and long-term development plan for low-altitude economy development. The progress of airspace reform eliminates bottlenecks in the development of the low-altitude economy and provides strong support and guarantees for the industry's future development. - Central and local policy deployments are accelerating, and low-altitude pilot cities are expected to expand further. The central and local governments have successively included "low-altitude economy" in the key work of the government work report for 2025 and planned a timetable and roadmap. On the basis of the first batch of 6 low-altitude pilot cities, it is expected that the second batch of pilot cities will be announced soon, and the domestic low-altitude airspace utilization rate is expected to be improved. - Low-altitude application scenarios are rich, and the commercialization process is accelerating. Low-altitude flight applications are widespread and constantly expanding with airspace reform. According to Porsche Consulting's calculations, by 2030, the annual demand for manned eVTOL aircraft in China will exceed 12,000 units, covering city commuting, intercity transportation, private travel, sightseeing tourism, medical and fire rescue, police security, and six major scenarios; By 2035, demand will further increase to 42,000 units. It is estimated that by 2035, commercial operation revenue will exceed 300 billion yuan, the market size of the entire aircraft sales and upstream supply chain will exceed 600 billion yuan, and the market size of other support services will also exceed 300 billion yuan, forming a market of trillions of yuan. - Infrastructure construction is expected to lead this year, with annual investment exceeding billions of yuan. The hard infrastructure investment for low-altitude flights exceeds 100 billion yuan annually. The bank calculates that from 2024 to 2027, the annual investment in hard infrastructure for take-off and landing fields will be 102 billion yuan, including 800 billion yuan for general airport runway construction and 220 billion yuan for take-off and landing field construction; the highest investment in low-altitude airspace system will exceed 22 billion yuan/year. - Risk Warning: Macroeconomic downturn; intensified market competition; slower than expected airworthiness approval pace; lower than expected production capacity; lower than expected downstream order demand, and so on.