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Commercial UAS: Access, Ecosystem and Market Evolution

For TTC’s UAS West Symposium

San Diego, CA. March 7-8, 2017

Ron Stearns,

Director, Business Development, Robotics and Unmanned Systems

DoD Aircraft Acquisition through the FYDP

Aircraft by Service Branch, 2015-2021

Fixed and Rotary Wing, 2015-2021

Aircraft by Category, 2015-2021

Source: Velocity Group analysis of DoD FY 2017 budget documents

With the inclusion of zero-hour rotary-wing programs (e.g. AH-64E, AH-1W to AH-1Z) and target drones (BQM-167, QF-16) there will be 3,037 DoD aircraft deliveries from FY 2015-2021. Rotary-wing aircraft are the major FYDP acquisition driver, owed in large part to operations tempo and airlift demand in United States Central Command

Transitions, Time Compression, Part 107

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.

5,309 Section 333s approved as of June

8,2016).

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 released June 21, 2016

From inertia to 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

Part 107: Early Takeaways

BVLOS will usher in viable commercial Group 3 UAS

“Progress in science is not linear, but rather exhibits periods of peaceful interludes punctuated by intellectually violent revolutions.” -Thomas Kuhn (paraphrased from “The Structure of Scientific Revolutions”, 1962).

Gold Rush, but who are the early winners?

Imagery, data and business analytics driving CONOPS and revenues

Commercial UAV size, weight and reliability must evolve

Small businesses, Hyper localized > $1mm in revenues

Greater: altitude, controller radius, operations over people

Increasing: mapping use, data reselling, applicability

Section 333 and Part 107 are building the safety case

Drone Advisory Committee: Paths Forward

“This Federal Advisory committee was formed to provide an open venue for the FAA and key decision-makers supporting the safe introduction of UAS into the NAS. Members on the Committee work in partnership with the FAA to identify and propose actions to the FAA on how best to facilitate the resolution of issues affecting the efficiency and safety of integrating UAS into the NAS.”

Developments of note from the DAC’s Jan. 31, 2017 meeting in Reno, NV

700,000 Registrants in year one of the FAA’s Online Drone Registry

42,000 FAA Drone Registrants registered as commercial users

35,000 Applicants for the Part 107 Pilot Knowledge Exam

17,000 Have passed the Part 107 Pilot Knowledge Exam

29,000 Number of remote pilots in U.S. with 6,000

DAC commercially-important activity:

• Operations over people not commercially involved and BLOS ops. (e.g. Pathfinder)

• Changes to the waiver process in work, to enable access beyond Part 107

• Subcommittees working to establish minimum aircraft equipage, moving away from consumer derivatives to commercial-grade UAS

• Needs for aggregated commercial safety data exist to build the commercial UAS safety case

• Subcommittees want to look beyond smalls, and scale these corollaries to larger UAVs

in process

Commercial UAS Ecosystem Snapshot

Analyzed 647 organizations with active pursuit/participation in UAS markets and assigned to categories based upon stated core competency Data Processing: video, imagery and analysis RF/Comms: wireless, nav., detection, antennas, satcomms EO/IR: manufacture of all modalities Services: insurance, training, measurement, legal, field support, engineering, test, consultants Embedded Products: GPS, PCB, computers, data storage Electronics: MEMS, cabling, circuits, solar, avionics, IMU, switches, converters, connectors, motion control Components: bearings, power, batteries, fasteners, servos, hydraulics, tooling, chutes, cases, ground support

Timelines and Present Conditions

Investment and Events

Consumer to Commercial

Product/Market Maturity

Market Focals

2014 2015 2016 2017 2018

Initial: Tens of Millions: 3DR, Parrot, GoPro Kespry, Measure (Daas)

Drone Life: 50 Hours 100 Hours 300 Hours 1000 Hours +

Hardware Software (Daas)Service

Very Small Companies Limited Industrial Use Proof of Commercial Concepts

Evolving Participants, Business Models

• Measure – Drone as a Service – new funding wave from VC and Private Equity

• Trumbull Unmanned – Oil & Gas, Drone-Enabled services provider

• Price Waterhouse Coopers – advisor to emerging industrial users, conduit to introductions

• AeroVironment – Commercial Ag.- DaaS is standing up with internally-developed drone

• Trimble Geospatial – Took UX-5 UAV in house, DaaS for Precision Ag.

• Altavian – Deployed services teams, mapping intensive

• AECOM – Industrial advisors and project management

• Airbus Ventures – Vahana = flying “Uber” vehicle

• Project Wing – Looking to vertically integrate

• Amazon Prime Air – Delivery, consumer goods

Evolving Models

Truly Disruptive

Market Gap – Commercial Opportunity

Canon DSLR = 3-4 lbs. $2000 for body, lens, gantry assembly Humidity, salinity, particulates are no-fly deal breakers

Current small camera mounting, approx. $1300

Weight wreaks havoc on small UAS capabilities. >10 grams can equal tens of minutes of flight time on a Risk Class 2 fixed-wing UAV Performance penalties are worse for VTOL UAVs. With maximum endurance of roughly 30 minutes

Desired Commercial EO/IR Sensor Properties: 1. ITAR Free – commercially-available,

worldwide 2. Stabilized 3. Environmentally robust: day-night and

weather-tolerant 4. Independently powered 5. Less than 1.5 lbs. for entire system 6. Much lower power draw 7. Store onboard or stream imagery 8. Modular, hot-swappable payload(s) 9. > 5-inch diameter gimbal

Current Systems and Costs

DJI Inspire T600 with thermal imager $12,000

The Xenmuse (DJI) thermal camera (FLIR) retails as a standalone for $6,900

FLIRview Pro SUAS starts at $2,000 Size: 2.48" × 1.75" x 1.75“ Weight: 3.25-4 oz

AeroVironment’s i23 gimbal on DoD’s RQ-11B Raven starts at $30,000

CloudCap (UTC Aerospace Systems) TASE 150 Aftermarket for $8000 1.98 lbs – 4.5” diameter ITAR Restricted

M1-D PTZ UAV Infrared Camera List price: $9,995 4.5” diameter > 2 lbs.

Risk Classes and Commercial Best Fit

• VTOL UAV capabilities in the 40-

60 lb. range are surpassed

every 18-24 months.

• Service providers are purchasing

UAVs in twos to avoid fleet

obsolescence

• VTOL UAVs > 40 lbs. will

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

Risk Class Aircraft Weight Example Aircraft NAS Access

RC -6 15,000 lbs. and up 2020+

RC-5 5,000-15,000 lbs. 2020+

RC-4 1,500-5,000 lbs. 2020+

RC-3 55-1,500 lbs.2019-2020

Exemptions

RC-2 6-55 lbs. Part 107

RC-1 1-6 lbs. Part 107

Commercial Markets: Data Needs

Aggregate needs, determine asset utilization, preposition assets for rapid response

Major Electrical Transmission Infrastructure

Corridors stretch for up to 800 miles. There are programmed collections for vegetation encroachment, subsidence and clearances. In some cases these datasets must be collected twice annually. There are emergency needs during brownouts or weather-related damage to the distribution infrastructure. An ISO can lose millions in days if it cannot locate and repair. The added costs come from having to purchase power from outside networks. Even with a crewed Helicopter and an observer dedicated and on call 24/7 there’s no guarantee they’ll be able to fly. A UAV could do the dangerous work in remote areas to isolate unexpected outages, damage and/or hot spots.

Oil and Gas: Major Transmission Infrastructure Density

Map of major natural gas and oil pipelines in the U.S. Hazardous liquid lines are in red, gas transmission lines in blue Concentration in Texas, Oklahoma and Gulf states will help to define UAS CONOPS as well as industry and political partnerships This represents a sophisticated, moneyed end-user set. UAS Requirements are understood and waiting for expanded BLoS airspace access Source: Pipeline and Hazardous Materials Safety Administration

Imagery and Data Capture, Process & Delivery: Developing Drone Layer

Electrical Government Oil & Gas Agriculture Forestry

VAR VAR VAR VAR

Woolpert, OH Sewall, ME Merrick, CO Terra RS, WA

Aerial Imagery

Aerial Imagery

Aerial Imagery

Aerial Imagery

Drone Imagery Drone Imagery Drone Imagery Drone Imagery

Wholly-owned fleets, light twins, single heavies, exquisite sensors

Will providers choose to own or lease drone fleets as projects dictate? Ownership introduces elements of variable costs and unpredictability

Specialized value-added resellers incorporate and layer metadata over imagery

Established imagery and information users comprise a roughly $4 billion annual U.S. data market

9x9” imager in C182 Aeryon’s Sky Ranger

Commercial Drones can flatten this information flow, with lower investment and technical barriers to aircraft ownership and data capture, but not processing and delivery. Mapping and surveying will remain specialized skill sets.

Commercial UAS Value Proposition

Fixed fleet operating costs, data

driven maintenance and upgrades

Improving existing designs for

performance, SWaP, and human

factors

Take new concepts from design

to manufacture under one roof

Keep fleet updated with

latest technology

Let you focus on selling

your service or platform

The Velocity Group is at the leading edge of onshore product development and rapid time-to-market. We are assembling a world-class portfolio of design and manufacturing organizations that put customer focus at the heart of everything we do.

Our mission:

We help our clients accelerate time from idea to profit by providing single-source accountability for and management of the entire range of resources needed to bring concepts to profitable, market-ready products, to scale up for manufacturing and to produce and sustain them efficiently and cost-effectively.

About Us

velocityfast

Ron Stearns Business Development Director Robotics & Unmanned Systems

Email ron.stearns@velocityfast.com info@velocityfast.com

Social LinkedIn: ron-stearns-5b819a Twitter: UnmannedRon

www.velocityfast.com/drones