Unmanned Aerial Systems: Transitions, Evolutions and Opportunity Analysis

For AUVSI’s XponentialMay 4, 2016

Ron Stearns, Director, Business Development, Robotics and Unmanned Systems

Transitions and Time Compression

May, 2014: FAA accepts petitions for

commercial UAS exemption under

Section 333 of FAA Modernization and Reform Act of 2012

First six Section 333 exemptions are issued on Sept. 25, 2014 to six

television and film companies.

More than 5,100 Section 333s approved

(May, 2016).

Blanket exemptions for test sites and 333 in

increasing effect. AGL from 400-800 feet

Moves toward Risk-based certification.

Night operations under Section 333.

Expedited, online commercial

registration. Part 107 seems imminent

From inertia to potentially normalized access in two years

From thousands of commercial UAVs to potentially millions –how can systems scale to accommodate?

• Regulatory• Production• Equipage• Information flow• Command and control• Operator certifications• Commercial service providers• Human-machine interface• Airworthiness

Concurrent Scenarios, DoD UAS Procurement

Counterinsurgency –“Manhunting”

Conventionally arrayed, near-peers

Low-intensity, long-duration

conflict

High-intensity, short-duration conflict

Relative Regional Stability Regional Instabilities

Owned Areas of Operation

Contested or Denied – Air, Space and Cyber

Risk Classes and Commercial Best Fit

• VTOL UAV capabilities in the 40-80 lb. range are surpassed by newer designs every 18-24 months.

• Service providers are purchasing UAVs in twos and fours to avoid fleet obsolescence

• UAVs > 40 lbs. will increasingly become a commoditized design space

• Barriers to entry for RC 1-2 rotary-wing platforms are few, but the ability to scale production and spiral in capabilities is unproven

• To do so will require a warm line, thorough IP sharing, real-time field feedback

Growth, Timing

When and where: The U.S. dedicated commercial UAV market will emerge in the 2020-2021 timeframe, when greatly increased airspace access through Risk Class 4 is possible. The most forward-leaning commercial UAS countries (NATO, ASEAN) will lead professional-grade UAV production and use from 2017-2020.

These countries have varying levels of commercial UAS rules to enable limited airspace access. United States’ industry is waiting for normalized “smalls” (0-55 lbs. MTOW) access potentially as soon as 2016-2017

Platforms: Anticipate in excess of 2.1 million commercially-dedicated UAVs entering the world market from 2016-2024.

More than half of these will be Risk Class 1 (up to 6 lbs. MTOW) and Risk Class 2 (6-55 lbs. MTOW). One million commercially-dedicated RC 1 & 2 UAVs will enter service over the next 10 years

Comfort Markets: Early Airspace Access & Growth

UAV Manufacturers within these 10 countries represent a qualified, established set of service providers as well as end users. Concepts of Operations and business models are being validated and vectored, with great applicability to U.S. NAS commercial work.

International UAV service providers and manufacturers will nurture and grow a U.S. footprint in anticipation of scaling commercial demand. Forward-leaning organizations will see a clear value proposition for programmed or on-demand, U.S.-based UAV manufacture and operations.

Scaling Challenges – Air Segment

• Current SUAS manufacturers have little contingency for rapid enterprise scaling. Purchasing parts from abroad (or machined/manufactured stateside) is a considerable variable cost. Risk Class 1 UAVs crash and break, as do their Risk Class 2 brethren. A Risk Class 2 octocopter can cost $80,000 per copy

• Quality in the supply chain will demand a move from “hobby shop parts” to professional grade motors, batteries, cables, etc. This is vital in decreasing manufacturing costs (waste) and operating costs (total life cycle cost - increased MTBF and improved up-time/revenue generating available hours).

• SUAS may be attritable assets within a defense paradigm, but excessive hull loses can quickly compromise a commercial service provider’s ability to image and deliver data. In addition, these scenarios create unpredictable and life-threatening costs to small businesses

• There will be growing opportunity for UAS manufacturing partners in a forward-fit or loss-replacement situations. Manufacturing service offerings such as: rapid prototyping and production, delivery scale and capability insertion will be force multipliers

UAV Cost Assumptions - Total Market

• Cost assumptions (to the end user) for commercially-dedicated RC 2-4 UAVs are derived from representative pricing for an assumed commercial UAV

• Probable price erosion will come in the RC-2 VTOL market, where barriers to design and manufacture are low, and new technologies are spiraled about every 24 months

Risk Class 2 –Representative 12-bladed VTOL intended for industrial imaging. $50,000 and up

20-lb. payload

10 minutes flight time

Risk Class 3 – Yamaha’s

R-Max purely commercial imaging derivative

200 lb. MTOW

$170,000/copy

Risk Class 4 – Aurora Flight Sciences Centaur OPV

Based on DA-42 GA Aircraft - $600,000 new, add $250,000 for OPV conversion. 3,945 lb. MTOW

These represent the best commercial price/performance/cost ratios

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