FAA May Be Off Target With Forecast For Threefold Growth In Commercial Drones

There’s some good information in the FAA’s new five-year Unmanned Aircraft Systems (UAS) forecast, but there are reasons to doubt the accuracy of the agency’s projections in two areas that have captured attention: the claims that there will be roughly threefold growth in the numbers of commercial drones and UAS-certified pilots. Here’s the good, the bad, and the ugly in the report.

The Good

There is some good analysis in this report. For example, it seems the FAA finally gets that drones have a wide variety of price points and the bulk of commercial activity has been driven by low-cost consumer-grade aircraft:

“Currently, the consumer grade dominates the non-model sector with a market share approaching 95 percent. However, as the sector matures and the industry begins to consolidate, the share of consumer grade non-model aircraft is likely to decline but will still be dominant. By 2023, FAA projects this sub-sector will have around 85 per-cent share of the overall non-model sUAS sector.”

This insight is mostly consistent with independent surveys and reports like this one, which finds more than 91% said they bought drones costing over $2,000 for professional purposes—either governmental, academic, or business.

The other good thing in this report is the FAA’s admission that the historical commercial drone registrations outpaced their own predictions by 80%.  Previously, they predicted a healthy growth rate of more than 40%—but they underestimated it.

“Last year, we forecasted that the non-model sector would have around 229,400 sUAS in 2019, a growth rate exceeding 44 percent from the year before (2018). Actual data far exceeds that trend with over 277,000 aircraft already registered by the end of 2018. Our forecast of non-model sUAS last year thus fell short by almost 80 percent for 2018 (or 277,000 actual aircraft vs 158,900 that we projected last year).”

The Bad

A closer look at the report reveals a few oversights and curious assumptions for their forecasts. Some of the key metrics and growth trajectories came from a survey the FAA conducted in June-July of 2018 about commercial activities performed in 2017 under Part 107. The survey sent to 89,000 individuals was intended to get a snapshot of non-model/commercial mission characteristics, including locations, aircraft types used, and altitudes flown. But the response rate to the survey—which was complex and time-consuming—was low (approximately 8 percent).

Still, the report projects the U.S. commercial drone fleet (small non-model UAS) to nearly triple from 277,386 in 2018 to 835,211 in 2023, an average annual growth rate of almost 25 percent. However, the main oversight is that most people don’t deregister their aircraft.  They may if they register a new one, but if they stop using one they are not going into the Registry to delete it. This keeps the current number inflated.

Another noticeable problem is the survey results are inconsistent with internal FAA data. And to be fair, the FAA admits there are big variations between the survey results and their aircraft registry. For instance, almost a third of survey respondents use one small drone; their aircraft registry (i.e., the Registry) indicates 55 percent use one small drone. The survey indicates that, for those operating multiple small drones, 54 percent operate 2-9, but the registry claims just on third fly multiple drones.

Another issue is the survey found the largest commercial use for drones was in R&D and in training/education missions (21%). But year over year, other industry benchmark surveys find the number one use for commercial drones is aerial photography and video. This disconnect is no surprise given how the FAA worded their survey questions. In this instance, the question asked for the number of missions performed on average per aircraft in each of activity they listed, not about its major intended use. Given most businesses were new to drones in 2017, it makes sense that the FAA found a lot of aircraft flew training missions back then—not actual industrial missions such as mapping and inspections as happens today.

The Ugly

Perhaps the biggest problem with the FAA report is in the Remote Pilot Forecast section. It predicts the number of UAS-certified pilots is “set to experience tremendous growth following the growth trends of the non-model sUAS sector.”  It predicts commercial drone activities may require almost 350,000 remote pilots in five years—a three-fold increase. Many in the press have run with this assumption and taken it to mean that the commercial drone industry is set to triple in the next five years. But a closer look calls this into question and makes that forecast specious.

To start, the FAA does not maintain a database showing the number of remote pilot certificate (RPC) holders who are current.  They only report gross new RPC holders. As reported here, 126,299 individuals have been issued a remote pilot certificate as of March 15, 2019.  But as of the same day, only 7,306 individuals have taken the remote pilot certification recurrent knowledge test, which is required every two years. Given remote pilot certification started in August 2016, that means only 20% of the original pilots have renewed their license to operate commercially.  To be fair, that figure may be higher but not by much since Part 61 pilots with an existing RPC and have met their flight review requirements are considered RPC current.

If the number of certified remote pilots is the benchmark for commercial drone industry growth (because, almost uniformly around the world, regulations demand each drone operation have one pilot), it seems crucial the FAA keep and report a database on current RPC holders in the U.S. That information would enable all to predict with greater certainty the growth of the commercial drone industry.

This article first appeared on Forbes.com
Image: A drone operator demonstrates a DJI Matrice 100 drone at the Applied Drone Technology for Business Conference. Photographer: Paul Faith/Bloomberg © 2019 BLOOMBERG FINANCE LP

New Commercial Drones Report: Current State of the U.S. Industry

UPDATE: September, 2016. This report has been updated to include the latest market trend and FAA Part 107 rules

I just released a new research report.  It details the state of the commercial drone industry in the U.S. as of the end of September 2015.  It looks at recent innovations, business applications, key ecosystem companies, and market forecasts. It analyzes the business impact and market opportunities that proposed Federal Aviation Authority (FAA) rules have on unmanned aircraft systems (UAS) manufacturers, distributors, service providers, and investors.  The 34 page report is a great primer for those who want to take advantage of the coming boom in this potentially lucrative industry.  It provides fresh information for industry veterans, entrepreneurs and investors, career changers/advancers, and corporate personnel in all industries. The full text of the report contains the most salient industry statistics illustrated by 12 figures and four tables.

Included in the report are the following:

  • A primer on commercial drones that discusses common terminology and the distinctive nature of commercial drones as aircraft systems and Internet of Things devices.
  • An outline of the growing number of commercial applications for drones, with categorization into major market segments for easier consumption and further analysis. We discuss the growing interest in commercial drones, what forecasters say about future demand, and what investors are banking on.
  • An overview of the industry’s flourishing ecosystem of businesses that support commercial drone activity. We present a few of the most prominent firms and companies that provide legal services, insurance, flight readiness applications, and training.
  • A detailed discussion of the fluid state of FAA restrictions on commercial UAS operations in the U.S – including the FAA’s proposed rules for small UAS. We also discuss the growing complexity of state and local issues, the current state of private sentiment and legal concerns, and the impact of proposed FAA rules. It shows that some markets are winners, but some are bigger winners than others. We report on the important details and determine the success factors in each market.
  • Statistics on commercial drone use. We compare the number of drone operators by country, the manufacturers who have the most aircraft in U.S. commercial operations, and which market segments are shaping up to be the biggest.

In the final section of the report you’ll get a glimpse of the future.  I present a list of several firms in Silicon Valley and across the U.S. that either have, are incubating, or are working on innovations that will solve the complex problems of UAS integration into the national airspace.

The report is available for purchase here.

If you have questions about what’s in the report or would like to comment on it after reading it write me colin@droneanalyst.com.

Image credit: Shutterstock

Drones Revolution Means Big Data Cloud Services

I love drones. No, not the big high-altitude ones like the Predator Drone, I mean the smaller low-altitude ones like Aeryon, Flexrotor, Phantom, and PrecisionHawk, that do everything from 3D mapping, to cinematography, to forensic inspections, to precision agriculture. I love making, programming, and piloting small unmanned aerial vehicles (sUAVs), and over the past several years I have made it an avocation to understand the impact this innovative technology will have on the future of business.

In this blog I discuss what I believe is the largest impact: big data cloud-based services.

Hardware is already a commodity. Today, much of the buzz about small unmanned aircraft systems (sUAS) is focused on the technology itself —  their components, their payload capacity, how fast they fly, how long they stay up, the latest camera, etc.  But honestly, those are quickly becoming non-differentiated product features. What is considered an innovation today– such as a stabilization gyro or avionic CPU – gets quickly mass-produced in Taiwan, China, or Mexico tomorrow. Airframe materials are generally the same—made of tried and true materials like light-weight shapeable foam and carbon fiber. For the buyer, it’s more a question of how much you’re willing to spend — like with a bicycle or laptop.

Software isn’t the differentiator either. For all drones, the interaction between the user and the aircraft is mediated by software. True, the quality of the pilot experience can be driven by the features and the quality of implementation, but this, too, is quickly becoming commoditized. For example, consumer-level vendors like 3DRobitics, DJI, and MikroKopter have software running at “ground level” for mission planning. The basic feature set includes: setting altitude, waypoints, speed, camera angles, and capture points. All vendors import Google Earth to help with that, and what once was done on a notebook PC and ‘uploaded’ to the aircraft prior to mission start is now performed on a tablet in real-time. Surely in the months ahead, usability will increase as planning software begins to import 3D models and perform pre-flight simulations, but that too will be a common feature across vendors. FAA regulations and public sentiment aside, we could, in fact, see Jeff Bezos’ vision of ‘Amazon Prime Air’ drone delivery technically feasible soon enough.

The greater value is in the data captured. Because small drones can fly at low-altitude, they make perfect precision image and data capture vehicles. Right now, it’s more efficient to fly an inexpensive drone over a large land area than it is to traverse it in a vehicle — and even more efficient than sending out an expensive multi-person surveying team. Keep in mind a digital photograph or video is not simply an image or composite of images. Rather, it is the result of processing visual light (blue, green, and red) as a binary numeric representation of a two-dimensional image—in other words, light becomes digital data. As cameras become more resolute, the amount of data captured goes up — as does the potential value of those images. But prices are coming down. For example, what once was available a few years ago only from a high-value satellite image service provider now comes from a drone affixed with a consumer level camera and off-the-shelf PC software. The software can automatically build textured 3D models from still images. And then there’s infrared cameras. They are now small enough, light enough, and cheap enough to mount on a drone. Infrared cameras don’t just let you see differences in heat; they let you measure those differences. So, there’s even more valuable data to evaluate.

Big farms mean big data. Dr. Kevin Price of Kansas State University says that about 80% of the money that will be spent on unmanned aerial vehicles in the next 10  years will be spent in the area of agriculture. He and others predict this will be a $100 billion industry by the year 2025.  While we dont agree with those numbers, we do see many agriculture applications for drones currently in development include data collection on crop health, vigor and yields; tracking the spread of invasive plant species; and monitoring cattle feedlots. Field images from cameras mounted on drones can be captured within an inch of accuracy. You can’t get that from a satellite or commercial aircraft image. Small drones are agile enough to provide ‘anywhere, anytime’ remote access. That means farmers and ranchers can do daily surveys to find exactly the right time to harvest or replenish feed stock. Similarly, changes over time can be equally revealing. By doing regular surveys and using software to highlight differences over time, it’s possible to zero in on anomalies. This valuable information, of course, can be used to improve productivity.

Cloud-based services are the future. You can buy a decent image-capture drone off the shelf for about $1200 US, but that doesn’t make you an image information specialist. The first thing you need to realize is that flying a drone and taking pictures is merely the first step in the data collection process. Images need to be corrected, calibrated, processed, stored, and evaluated. For precision agriculture and mapping, data quality and post-processing are critical to getting real value from the images. And helping the customer attain that value is the role of a data services provider. Already PrecisionHawk offers a service they call PrecisionMapper (now called DataMapper), “a cloud-based application that gives anyone the ability to upload, store, process, and share their aerial image data.”

By gathering data on a large scale over time, service providers will be able to process unprecedented levels of detail data and turn it into usable information for farmers. This vision is confirmed in a recent article where PrecisionHawk’s president Ernest Earon says ” the company views itself as a data company, rather than a drone company. He envisions an “app store” model that would allow, say, somebody in North Dakota with a top-notch algorithm for detecting potato blight, to license it to other farmers.”

There you have it. This is the future of small drones and I suspect as their use and applications increase small and medium business (SMB) niche service providers will flourish.  And as they flourish these firms will differentiate themselves based on processing speed and the salience of their insights. Certainly the use of a cloud-based in-memory computing platform to accelerate analytics, processes, and predictive capabilities will be foundational to that differentiation.

Feel free to leave a comment telling me about your interest in this innovation.

Image credit: Shutterstock

This post also appears on SAP Business Innovation

The Yellow Brick Road of FAA Drone Regulations

This post provides a few helpful links to get you started on the journey of understanding Federal Aviation Administration (FAA) regulations for UAS.  Come back later and look for updates.

There are three basic categories of UAS operations as defined by the FAA – LINK

  1. Public. This includes public entities such as federal and local governments, police departments, universities, etc. Public entities must obtain a Certificates of Waiver or Authorization (COA) from the FAA for approval to operate. This is a lengthy/drawn out process that takes months to materialize.
  2. Civil. This includes commercial and private industry operators. Civilian operators do not have to obtain a Certificate of Authorization or Waiver otherwise known as a COA. They do, however, need approval to operate by obtaining a Special Airworthiness Certificate (SAC) from the FAA. The necessary steps for SAC obtainment are cumbersome. The one step that stands out is the necessary requirement of being a certified pilot regardless of aircraft size or operating altitude. This is a great barrier since the vast majority of people interested in operating UAS are not certified pilots.
  3. Recreation / Sport. Any person operating a model-aircraft UAS for recreation or sport or hobby falls into this category. Hobbyists are to abide by the 1981 document AC 91-57 and fly without certification or approval. The basic standards of AC 91-57 are: operation away from populated areas, maximum flying height of 400 ft above ground level, remain within line-of-sight, vehicle must be less than 55 pounds.

Start your detail journey here:

  • FAA Unmanned Aircraft Q&ALINK
  • Fact Sheet – Unmanned Aircraft Systems (UAS)LINK
  • Unmanned Aircraft Systems (UAS) Certifications and AuthorizationsLINK
  • Unmanned Aircraft Systems (UAS) Regulations & PoliciesLINK
  • Busting Myths about the FAA and Unmanned AircraftLINK

Next, get a handle on the FAA Modernization and Reform Act of 2012. LINK. See Subtitle B for Unmanned Aircraft Systems.

Then take a look at the Unmanned Aircraft Systems (UAS) Comprehensive PlanLINK

The FAA also has a roadmap for integrating drones. Check out the Integration of Civil Unmanned Aircraft Systems (UAS) in the National Airspace System (NAS) Roadmap – LINK

The FAA has issued Restricted Category SACs for two “small” UAS weighing less than 55 pounds that had previous military acceptance of the designs – LINK

There are six UAS test sites for drones – Alaska, Nevada, New York, North Dakota, Texas, and Virginia

  • Here is the FAA’s original Press Release – LINK
  • Here is the Fact Sheet – FAA UAS Test Site ProgramLINK
  • Here is the FAQ for UAS Test SitesLINK.

There is a Notice of Intent to Establish the FAA Center of Excellence (COE) for Unmanned Aircraft Systems (UAS) –  LINK

The Department of the Interior (DOI) Office of Aviation Services (OAS) and the Federal Aviation Administration (FAA) have a Memorandum of Agreement (MoA) regarding operation of small Unmanned Aircraft Systems (sUAS) in Class G airspace. – LINK

The Academy of Model Aeronautics (AMA) and FAA signed a memorandum of understanding (MOU) is the establishing the platform upon which the AMA and the FAA will jointly work to ensure the continued safe operation of model aircraft in the National Airspace System. – LINK

But wait, there’s more. You need to understand Federal Aviation Regulations (FARs) and FAA Advisory Circulars (AC).  FARs are mandatory, but ACs are not.  Abiding by Advisory Circulars is ‘strongly recommended.’  The FAA Advisory Circular that has the biggest impact right now is  AC 91-57.

This FARs link is a good resource to have for all aircraft operators including recreation / sport.  Every pilot should be aware of and comply with Temporary Flight Restrictions (TFR) and Notices to Airmen (NOTAM) that may affect your area of operation. Current TFRs and NOTAMs are available for viewing by using the FAR’s link.

Regarding those flying model aircraft for commercial purposes it should be noted that the recent Pirker case law has implications. As noted here by a former top attorney for the FAA:

..the FAA created its own legal confusion by relying on advisory (as opposed to regulatory) methods for distinguishing model aircraft (which could include the small drone operated by Mr. Pirker) from other aircraft beginning in 1981.  Its attempt to retroactively distinguish model aircraft based on the nature of their operations (commercial vs. non-commercial) is unenforceable as that distinction has only been made via public notices (first starting in 2007) and not by  rulemaking.  Since notices are not rules, they are legally unenforceable.

See this chart of International Airspace Classifications.  Click on image to enlarge.

Airspace Classifications

Congratulations! You have reached the Emerald City!

…well, maybe not yet.  Check back later to keep up the latest regulations.