The Drone Industry Takes Off

Historically relegated to primarily military uses, drones, or unmanned aerial vehicles (UAVs) as they are officially called, are growing in popularity for commercial applications. As industries see the potential for new applications of drones to improve business efficiencies, the industry has truly taken off.

Drones can be thought of as more advanced versions of model airplanes. They are typically piloted from the ground by using a radio controller, but some are capable of autonomous flight. Some hobbyists enjoy drones simply for the challenge of maneuvering them through the sky, but a variety of tasks are possible, including aerial photography, emergency response, various sensing capabilities, and even package delivery.

The consumer drone market continues to show dramatic growth, as the interest in the technology for recreational use grows. ABI Research forecasts growth in consumer UAV shipments from 5 million in 2014 to 90 million by 2025, a compound annual growth rate of 30.4%. The affordability of drones has contributed to their popularity—mid-market models sell for a few hundred dollars.

While consumer sales skyrocket, commercial applications for drones have been hampered by the slow-to-adapt regulatory environment. Until very recently, Federal Aviation Administration (FAA) regulations have limited commercial drones to a select few industries under an exemption program, but as regulators catch up with the industry’s advances, the sky may be the limit for potential commercial applications of the technology. New rules released by the FAA last month now allow a broad range of businesses to use drones under 55 pounds, though these rules do not necessarily preclude state and local regulations that have been enacted in recent years. The new rules—which do not allow for autonomous drones, mandating that a commercial drone operator must have the drone within line of site—go into effect in August.

What are they key applications for commercial drones?

In a recent analysis, Goldman Sachs forecasted that the global drone market will reach $100 billion by 2020, with $21 billion coming from commercial drones. A recent report by PricewaterhouseCoopers quantified the cost of labor and services, or “addressable value,” in various industries that could potentially be replaced by drone-powered solutions. The report estimates that over $127 billion of these costs could be replaced by drone technology.

Agriculture

Agriculture is likely to be one of the largest users of drone technology. Agricultural consumption continues to rise as a result of global population growth, and given the importance of sustainable food production practices and obstacles such as climate change, efficiencies offered by technological advancements will be critical to satisfying the global demand for food.

Drones can make agriculture more efficient in several ways. Drone technology offers crop supervision capabilities, including soil and field analyses, and even planting. Various startups have created drone planting systems that achieve high uptake rates while significantly reducing planting costs. The systems shoot pods with seeds and plant nutrients into the soil, and also provide data for irrigation and nitrogen level management. Drones can also assess the health of plants and the presence of bacteria or fungal infections using light scans. Crop spraying is yet another application, which has the potential to reduce the levels of excess chemicals entering groundwater since drones can spray more efficiently as compared to traditional methods.

Infrastructure & Construction

The infrastructure and construction sector is another high-opportunity industry when it comes to implementing drone technology. Drones can be used throughout the construction process for activities such as providing field data to improve the speed and quality of the design process, surveying sites, monitoring work sites for safety and security, assisting with the positioning of materials such as slabs and pipelines, and even environmental impact reporting.

Moreover, drones have the potential to diagnose problems with crumbling infrastructure, and also repair them. For example, a drone might detect a crack in a bridge or building façade. Equipped with a 3D printer, a drone can then produce a replacement part and repair the damage; the first flying 3D printer was created back in 2014. Drone technology can also be used to perform tasks such as painting and window cleaning at extreme heights, relieving humans of the need to engage in such dangerous activities.

Transport

Delivery of packages has been one of the more attention-grabbing applications of drones, with companies such as Amazon and Google leading the charge. With e-commerce still only a small but rapidly expanding sliver of overall retail spending, the growth potential is huge, which means the need for efficient package delivery will become ever more critical. Amazon Prime Air, Amazon’s last-mile delivery system that will transport packages to customers within 30 minutes, is currently in the works. Regulatory support is needed before the system can be implemented—a substantial barrier according to an assessment by Goldman Sachs—but Amazon continues its research and development efforts.

Google’s Project Wing has been in the works since 2012, and is another package delivery application for drones. Earlier this year, Google filed a patent on a “delivery receptacle” designed to take packages from an “aerial delivery device” for deposit in a secure location. The receptacle would use infrared beacons to connect with drones in the air and then guide them for delivery. It would then take the package to a specified location, such as a garage. Google anticipates delivering packages using drones as soon as 2017.

Other Applications

Some other admittedly less alluring, yet certainly valuable uses for drones include applications in the insurance industry. Drones can monitor threatened areas and alert local residents if an emergency arises, allowing additional time to react to impending disasters and preventing casualties and major damage. Other industries identified for their potential to incorporate drone technology include:

  • Real estate – photographing buildings for marketing, property management, and construction
  • Entertainment – aerial photography and filming, advertising, creation of special effects
  • Security – monitoring otherwise hard-to-reach locations
  • Telecommunication – broadcasting of telecommunication signals in areas with sub-optimal coverage

What does this mean for economic development?

With the proliferation of potential commercial applications for drones and the loosening of regulations surrounding their implementation, the drone industry is anticipated to soar over the next decade. The research and development, manufacturing, and marketing of drones for commercial purposes presents vast opportunities in regions equipped with the talent required to bring the technology to market.

In 2013, the FAA designated six drone testing sites within the U.S. to conduct research on how to safely integrate drones into the nation’s airspace. The following applicants were selected to operate test sites:

  • Griffiss International Airport (Rome, NY)
  • University of Alaska (Fairbanks)
  • State of Nevada (Reno)
  • North Dakota Department of Commerce (Grand Forks)
  • Texas A&M University (Corpus Christi)
  • Virginia Tech (Blacksburg)

In these regions, the burgeoning drone industry has become a catalyst for economic development. The Griffiss International Airport site in Rome, NY, is focused on developing tests and evaluations, as well as verification and validation processes under FAA oversight, and researching “sense and avoid” capabilities. CenterState CEO, the Central NY region’s economic development organization, has partnered with local officials and businesses to position the area—which includes the cities of Syracuse and Utica—as a national hub for commercial drone researching, testing, and manufacturing. In December 2015, the region was awarded $250 million for drone initiatives through the Upstate Revitalization Initiative (URI).

The region has already seen economic spillover effects beyond the test site, with several companies in the area involved in developing technology that will allow drones to detect and avoid each other. An expansion of Canadian firm AVYON, Pro Drones USA, LLC, recently moved to a Tax-Free Area on Mohawk Valley Community College’s (MVCC) Rome Campus as part of the START-UP NY program. The company will create five jobs and invest $1 million.

At least one higher educational institution in the region is also anticipating an increase in demand for skills related to unmanned aerial systems. MVCC’s Utica Campus recently launched a new Associate of Applied Science degree program in small unmanned aerial systems to prepare students to participate in the region’s growing drone industry.

The applications for drones truly seem endless. This futuristic technology has the potential to shake up the way many industries conduct business, and it is yet another step toward the ubiquitous automation of our economy. As regulations governing drones continue to loosen, the industry is poised to soar.


 

http://www.nytimes.com/2016/06/22/technology/drone-rules-commercial-use-faa.html

http://www.nytimes.com/interactive/2015/technology/guide-to-civilian-drones.html?_r=0

https://www.tractica.com/research/drones-for-commercial-applications/

http://www.businessinsider.com/uav-or-commercial-drone-market-forecast-2015-2

http://www.marketwatch.com/story/this-is-how-most-of-the-worlds-businesses-will-use-drones-2016-03-18

http://www.pwc.pl/pl/pdf/clarity-from-above-pwc.pdf

https://www.faa.gov/news/fact_sheets/news_story.cfm?newsId=15575

http://www.wsj.com/articles/upstate-new-york-seeks-economic-boost-from-drones-1459126197

 

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