UNMANNED VTOL SYSTEMS: An Assessment of VTOL UAS Adoption in the Defence & Security Sector

A Frost & Sullivan

White Paper

Bruno Mucciolo and

Aman Pannu

www.frost.com

50 Years of Growth, Innovation and Leadership

UNMANNED VTOL SYSTEMSAn Assessment of VTOL UAS Adoption in the Defence & Security Sector

1. THE CONTEXT .......................................................................................................3

1.1 Initial considerations of the UAS market..................................................3

1.2 Why are we writing on VTOLs? .................................................................3

1.3 Frost & Sullivan expertise in the Unmanned Systems Market..................3

1.4 Objectives ..................................................................................................4

2. INTRODUCTION: WHY VTOL ................................................................................4

2.1 Frost & Sullivan’s views on the current and future market of the UAS....4

2.2 The current market for VTOL UAS ..........................................................10

3. AN ASSESSMENT: ADOPTION OF VTOL IN DEFENCE & SECURITY.... ..............15

3.1 Operational factors impacting adoption of VTOLs ..................................15

3.2 Technical challenges and benefits in successful deployment of VTOLs.....19

3.3 Critical Success Factors: Potential business models for VTOLs ...............19

3.4 Benefit Analysis of VTOL UAS .................................................................22

4. CONCLUSION........................................................................................................23

4.1 Summary analysis of supply and demand for VTOLs ...............................23

4.2 Market recommendations ........................................................................24

4.3 Next Steps: Potential Roadmap of VTOL UAS .........................................25

5. GLOSSARY .............................................................................................................26

Frost & Sullivan

CONTENTS

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Frost & Sullivan

1. THE CONTEXT

1.1 Initial considerations of the UAS market

Mission commanders immaterial from where they act, in-theatre, base camp or

mission HQ thousands of miles away, have one common dependence factor-

‘Information’. Enhanced situational awareness, ability to conduct missions miles

from its borders, and precision attack capabilities are some of the norms of today’s

warfare. This type of force projection is primarily delivered using unmanned

technologies, whether it is the original unmanned system, the satellites, or the latest

unmanned aerial systems (UAS). With significant flight hours under its belt, the UAS

are fast becoming a must-have item on the military inventory, and bar the regulatory

challenges, the same could be true for the security domain.

1.2 Why are we writing on VTOLs?

NATO categories defining the unmanned platforms include- fixed-wing (FW) UAS,

rotary wing UAS (VTOL), and the morphing UAS (platforms that can hover and fly).

Frost & Sullivan while researching the UAS market over the last decade, identified

the industry’s confidence in the overall capabilities of the FW UAS technology and

its applications. However, when it comes to the VTOLs there is much debate, and

dare we say confusion with both end-users and the industry, in defining the

technical and operational benefits of the VTOLs - independent, in comparison, and

complimentary of substitutes and alternates such as the FW UAS, and the

traditional manned platforms. For this reason Frost & Sullivan has undertaken the

challenge to research the existing perception of the industry, and analyse the

anticipated potential for VTOLs across the defence and security domains.

1.3 Frost & Sullivan expertise in the Unmanned Systems Market

Frost & Sullivan is a market intelligence leader on the UAS domain, with over seven

years of in-depth coverage of the market dynamics and evolution. Our Global UAS

Programme, part of the Aerospace, Defence & Security practice, has developed

thorough leadership analysis on the market for military UAS - from HALE to

Tactical UASs - as well as the emerging civil market. As an ongoing programme, Frost

& Sullivan has a dedicated team of analysts covering current and future market

opportunities in the UAS sector, monitoring the evolution of this ever-changing

market.

As per its day-to-day activities, Frost & Sullivan has supported its main clients from

the Defence and Security sector with detailed assessment of the market to support

their strategic decisions and investment options.

As part of our recognised brand in the field, Frost & Sullivan has worked with the

European Commission, EDA and other public entities by providing analysis on the

UAS market in order to increase awareness of the benefits of using the technology,

to facilitate initiatives related to regulations for the civil UAS sector, and to define

optimal strategies for governments and private sector on how to invest in the

unmanned idea.

1.4 Objectives

• Increase market awareness of VTOL UAVs

• Explore the challenges in successful adoption of VTOL technologies from

an end-user and industry perspective

• Provide tangible assessment of the target applications for the VTOLs

2. INTRODUCTION: WHY VTOL

2.1 Frost & Sullivan’s views on the current and future market of the UAS

• Frost & Sullivan’s assessment of the global UAS market

26th June 1935, Hampshire, United kingdom, the first unmanned plane made its first

public flight debut. Used for anti-aircraft gunnery practice, the radio controlled

Tiger Moth bi-plane was nick-named ‘Queen Bee’. Three-quarters of a century later

the Queen Bee has given way to a beehive of unmanned aerial systems (UAS)

deployed across a range of mission critical applications including surveillance,

reconnaissance, earth observation, and target acquisition and elimination. However,

it is in the last ten years that the unmanned systems have experienced a quantum

leap in both, technology development and adoption.

Despite the early mover advantage of the United Kingdom / Europe, it is Israel and

the United States who took the lead in the unmanned systems domain. Although,

the experience of using mature unmanned systems on operational deployment has

dramatically improved the understanding of the usefulness of UAS in Europe and

Asia Pacific, and this in turn is driving a steady growth rate across the military

segment. The growing dependence of defence and security end-users on real-time

information aimed at improving situational awareness for informed-effective

decision making is driving the adoption of the UAS across multiple theatres and

missions. The success of UAS in providing this real-time information to military

commanders has contributed to both mission effectiveness and in protecting

personnel. It is UAS effectiveness in these roles, which has encouraged most

advanced militaries (and now emerging) to fully commit to the use of UAS and this

is expected to drive rapid market growth during the next ten years.

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Frost & Sullivan

The growing

dependence of defence

and security end-users

on real-time

information aimed at

improving situational

awareness for

informed-effective

decision making is

driving the adoption

of the UAS across

multiple theatres and

missions.

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Not purely driven by the diminishing government spending, albeit an important

catalyst, the industry have moved beyond pure military sales and have shown a

significant amount of interest in potential UAS applications in civil and commercial

markets. In line with the prevailing trends across the defence sector, the military

has acted as a first adopter of UAS and has demonstrated their utility, encouraging

the idea of the use of UAS in a large number of non-military applications ranging

from law enforcement and border security to earth observation and

communications. Historically, industry has often been accused of unrealistic

optimism in expecting the rapid emergence of a viable civil and commercial UAS

market. However, at the same time industry has played an effective advocacy role in

driving initiatives in the area, particularly in Europe and to some extent North

America.

• Summary of key drivers and restraints

Whilst the military end-users in the developed countries have now battle tested the

UAS, and better understand its capabilities and limitations, and more importantly

mission types, their counterparts in emerging countries, including many western

nations are unaware and somewhat skeptical of the real benefits of UAS. This

skepticism is not always driven by lack of trust for the technology or unavailability

of funds. Other restraints such as the force demographic, existing infrastructure,

training, regulations, and even lack of established local industry dissuade end-users

from actively adopting UAS solution, as an alternate or compliment to existing

solutions.

Figure 1: Drivers and Restraints Impacting the UAS Market

Source: Frost & Sullivan analysis

Frost & Sullivan

Restraints

• Troop Withdrawl

• Defence Spending

• Regulations & Legislations

• -ve End-user Perception

Drivers

• Force Multiplier

• Industry & Innovation

• New Applications & Markets

• +ve End-user Perception

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Force Multiplier vs. Troop Withdrawal

As the battle in Afghanistan comes to an end, at least from active battle troop’s

point of view, the war is not over. Industry and geo-political experts have indicated

a need for NATO forces to be actively support the Afghan troops in combating the

militant elements from taking over the state. The withdrawal of troops around

2014-2015, is expected to only further enhance the need for deploying UAS to

provide ongoing situational awareness, and to have battle ready engagement where

required. UAS have proven to be a force multiplier for the NATO forces, and it is

expected that UAS will continue to be fielded within this theatre in the foreseeable

future. Frost & Sullivan research indicates an increase in long-endurance platforms,

such as MALE and HALE, with deployment of TUAV (and smaller) to support any

expeditionary mission requirements.

Industry & Innovation vs. Defence Spending

The Global Defence Expenditure in 2010 was around $1,630.00 billion, which is an

increase of 1.3 percent when compared to that of 2009. Interestingly, this is the

slowest annual increase since 2001. The rate of increase in the United States

defence spending had slowed down to 2.8 percent in 2010, while the average annual

increase between 2001 and 2009 was 7.4 percent. In Europe, defence spending in

2010 fell by 2.8 percent. However, at the same time the military spending in Asia

continues to grow rapidly. In the Middle East, the defence expenditure in 2010

witnessed a growth of 2.5 percent when compared to 2009. The economic

recession has taken a toll on the Western nations and will force them to plan for

smarter expenditures in the upcoming days. Meanwhile, the aspirations of the

emerging economies are expected to drive the defence market in the region.

Over the last decade, the UAS have become weapons of choice in most military

campaigns. The military forces have understood and acknowledged the need for

unmanned aerial vehicle capability. In these challenging times the end-users are

looking for innovative ways and technologies to maintain full operational

capabilities, and to meet the dynamic mission requirements of tomorrow. Industry

has proactively responded with innovation in technology aimed at versatility of

platforms and applications, and improving efficiency, along with introduction of new

business models to support and sustain the end-users, which is driving the adoption

of UAS. Procurement models such as Platform Lease, Contracting for Availability

(CfA)/ Performance Based Logistics (PBL), and Total Solution have given end-users

the flexibility to adopt such solutions despite the given challenges. Frost & Sullivan

research indicates that the increasing reliance on UAS complemented with the

industry efforts will limit the impact of budget cuts on UAS.

New Applications & Markets vs. Regulations & Legislations

Research indicates that the market potential on the civil side is considerably larger

than the military sector in the long term. UAS are being considered for active role

in maritime patrolling, surveillance, fire monitoring and fighting, HAZMAT

monitoring, disaster management, search and rescue, counter drug operations,

urban and sub-urban law enforcement, conflict monitoring, environmental and

scientific missions, agriculture, fisheries, and many other applications. However, at

the moment there are major constraints: lack of a central procurement authority

for government applications; absence of legislation and regulations for safe flight in

integrated airspace; dispersed and highly heterogeneous potential customer base; to

name but few.

Frost & Sullivan

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In addition, initiatives to promote and facilitate the use of UAS in non-military

applications have been relatively un-coordinated and ad-hoc in nature. Over the last

three years work has begun in earnest to kick-start the civil UAS market through a

number of initiatives at national and European level, and in cooperation with

military users. These initiatives are primarily aiming to deal with the key problem

which is the lack of a framework / rules governing the flight safety on the one hand,

and insertion of civil and military UAS in non-segregated airspace on the other.

However, some rules have been put in place. On the civil side, airframes with a mass

of more than 150 kilos are now required to obtain airworthiness certification at a

European level from the European Aviation Safety Agency (EASA). On the military

side, the French Military Procurement Agency (DGA) have also developed

Unmanned Aerial Systems Airworthiness Requirements for fixed-wing UAS, which

has been adopted as the basis of NATO’s STANAG 4671.

+ve End-user Perception vs. –ve End-user Perception

End-user perception is driven by varied factors, as indicated earlier. The adoption of

UAS is restrained due to economic, political, social, and technological factors. Most

NATO nations have accumulated significant mileage in flight heritage for UAS, and

are actively deploying or are in the process of adopting the UAS as an integral part

of the defence strategy. However, countries that are not as combat active as the

NATO allies, and others that lack the technical and financial prowess of developing

such systems, have not fully embraced the benefits of UAS. As a result there are two

force types today, ones that have UAS capability, and the ones that do not.

However, daily headlines of the effectiveness of such systems in theatre is not going

unnoticed, and countries across the globe including India and China understand the

need to go on a war-footing to equip the national forces with UAS capabilities.

Another aspect that the end-users are progressively contemplating and finding

solutions for is to find the best fit UAS for conducting specific missions. The

emergence of VTOLs is driven by such an approach wherein the FW UAS are limited

to areas of operation due to the required landing and take-off logistics. The ability

of VTOLs to be launched in almost any terrain, static or mobile, has provided the

impetus to explore and introduce VTOL UAS in the mission inventory.

Research indicates that an active adoption of UAS across defence and security

applications needs a combination of end-user acceptance and industry engagement

besides the PEST factors discussed above. Speaking with various industry

stakeholders indicates that end-users widely acknowledge the success of UAS, and

are actively exploring options that are best suited for their own forces. The ultimate

decision will be dependent on the type of mission requirements, the interoperability

with existing systems, and the end-users ability to operate such systems.

• Views of the Future

The major military forces in the world have understood and acknowledged the need

for UAS capability. Though many nations have strong UAS aspirations, availability of

funds reflects the actual market revenues.

Frost & Sullivan

The ultimate decision

will be dependent on

the type of mission

requirements, the

interoperability with

existing systems, and

the end-users ability

to operate such

systems.

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Figure 2: Total Military UAS Market: Unit Procurement and Revenue

Forecast (Planned / Anticipated Programs)

Frost & Sullivan’s research indicates the following demand trends for UAS globally;

• The spending by the United States for mid- and large-sized UAS will

decrease from $5.09 billion in 2011 to $2.35 billion in 2020. This

reduction in spending by the United States is expected to slow down

the global UAS market which will be partly compensated by the

European and Asian markets.

• Asia Pacific and European markets will witness a growth rate of 26.3

percent and 20.3 percent, respectively, from 2010 to 2020.

• Competition in MALE UAS segment will be intense in Europe, as there

is a trend of increasing collaborations to develop such capabilities.

• The Asian market has a strong immediate demand for high altitude, long

endurance (HALE) and medium altitude, long endurance (MALE) UAS.

During 2011 to 2020, 41 HALE and 202 MALE UAS are expected to be

procured in the APAC region.

• The Middle East and Latin American markets are largely untapped.

Middle East and Latin American markets are expected to grow at rate of

15.1 percent and 19.3 percent, respectively from, 2010 to 2020.

Frost & Sullivan

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Revenue ($ M

illion)

Year

Units

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

4.547.6 6,082.0 5,482,0 6,041.0 6,253.0 6,024.0 5,715.0 5,679.0 5,818.0 6,969.0 7,314.0

103 153 178 173 178 177 181 168 190 220 224

250

200

150

100

50

0

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan analysis

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Figure 3: Total Military UAS Market: Growth Position Map, Global,

2010–2020

• Ongoing military operations and force modernisation efforts are the

major drivers for the military UAS market.

• Withdrawal from Afghanistan will have a short-term impact on the UAS

market, as the existing lease agreements will come to an end. However,

a need to sustain situational awareness, geo-political dominance in the

region will demand a rethink of strategy.

• In the long term, withdrawal from Afghanistan will turn into a driver, as

the countries will be able to allocate resources for equipment

procurements.

• The global market for medium and large sized VTOLs is still nascent.

Although ongoing development programmes (and limited in-service) are

gaining traction with the end-users in active deployment of VTOL

systems for niche applications.

Frost & Sullivan

1

2

34

5

CAGR

Small Medium Large

(<$15 B) ($15 B - $30 B) (>$30 B)

1

2

3

4

5

Sectors with

highest total

growth

potential

- APAC

- Europe

- Middle East

- Latin America

- North America

Market Size

High

Low


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Figure 4: Total Military UAS Market: Unit Procurement and Revenue

Forecast by Vertical (Planned / Anticipated Programs)

2.2 The current market for VTOL UAS

At the time of writing this white paper Frost & Sullivan followed about fifteen different

types of VTOL UAS (some deployed, many in advanced development stages), of which

two were fielded within 24 hours of each other. It is essential to note that of these a

significant number are driven by industry led research and development programmes,

a sign of industry’s belief in the technology and potential applications that are

expected to drive demand. While the Fixed Wing (FW) UAS have been widely deployed

within the defence (and security, albeit partially) domain, the Rotary Wing (RW) UAS-

VTOL are yet to have a foothold within these domains. The confusion clouding the

technical ability or complexity of deploying VTOLs to fulfill mission requirements

continues to challenge both, the end-user and the industry.

Frost & Sullivan, through this white paper based on primary research conducted

across industry experts and end-users aims to bring forth the drivers and restraints

influencing the successful adoption of VTOLs in-theatre.

• End-user Perception of VTOLs

‘Flexible-Deployable-Responsive’ surmises the end-users perception of VTOL

platforms with an aim to deliver specific mission requirements. End-users indicate

that in time as VTOLs establish proven flight heritage, they will actively participate in

supporting defence and security mission requirements. However, most if not all end-

users foresee the deployment of VTOLs, although essentially in niche mission areas

when compared to the broader scope of FW UAS and other manned platforms.

Frost & Sullivan

‘Flexible-Deployable-

Responsive’ surmises

the end-users

perception of VTOL

platforms with an aim

to deliver specific

mission requirements

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VTOLs ability to take-off and land in practically most mission areas gives it the

flexibility to be deployed in situations that demand rapid response. The

expeditionary nature of today’s battles has led to increase in demand for real-time

situational awareness, and operationally responsive equipment. VTOLs have a unique

ability to fulfill this task and support the expeditionary forces of today immaterial

of the terrain. It is this ability to deploy from mobile platforms that has attracted

Naval forces, including Coast Guards to explore the acquisition of VTOLs on board

its fleet. End-users, similar to UAS, look at VTOL as a force multiplier, enabling fleet

commanders to undertake tasks and make decisions in a more informed and

responsive manner. However, end-users are vary of introducing VTOL systems

within the larger battle management system without clearly defining the mission

requirements VTOLs best fit. Research indicates that some of the most important

questions that end-users want the industry to answer are;

- What will the platform be used for?

- How will the platform support a mission?

- What is the value-add: technology, cost, process, efficiency,

applications etc?

A single task such as Anti-Piracy mission may have multiple scenarios and

requirements. The end-user needs will define the capabilities of a VTOL platform-

ISR capable, weaponised or non-weaponised, monitor or engage enemy. Frost &

Sullivan research identified an end-user expectation, which proposes that the

industry should focus on concept of operations (CONOPS). This CONOPS should

then be used to develop the platforms, rather than doing it vice-versa, wherein the

capabilities / limitations of platforms define the missions it can be deployed to.

• Industry Perception of VTOLs

An important question to answer for the industry is that are VTOLs an innovation

or an adoption of existing solutions. Interestingly enough this is a chicken and egg

dilemma for the industry. What came (comes) first?

Frost & Sullivan research indentified dual approach from the industry in developing

the same solution- an efficient, and easy to use and deploy VTOL UAS. One group

of industry participants are focusing on developing the platform, which would then

be loaded with systems and capabilities that apply to multiple missions. The other

group is focused on developing systems and sub-systems integrated into a platform

solution, which can then be applied to multiple missions. The advocates of the latter

believe that this approach ensures that VTOL capabilities are custom designed to

operate across multiple mission areas. This also takes into consideration the

complexities originating from the deployment of a RW platform, such as vibration,

wear and tear, and noise levels. However, this approach tends to have longer

development cycles and potentially higher development costs, which are critical

success factors in selecting defence and security solutions today.

Independent of the above discussion, the industry perceives that VTOL UAS with its

ability to conduct stop and go missions, capability to hover and focus on a

particular area, and ability to take-off and land in most terrains presents a unique

value proposition for end-users. In the current circumstances where the regulatory

frameworks for integration into the civil airspace are yet to be clearly defined,

VTOLs are considered an apt solution for operating in high risk, segregated

airspace, which requires a responsive solution.

Frost & Sullivan

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This includes a potentially high demand for security applications such as law

enforcement, first responder services, fire fighting and monitoring, disaster

management, crowd monitoring and control etc. Despite the progress in technology

and platform development, industry acknowledges the need to make further

advances in areas of endurance, platform stability, automatic-mobile landing, and

overall efficiency. However, the current platforms are capable to meet the mission

requirements of today. As VTOL UAS accumulate operational flight hours, the

product and technology will continue to evolve to meet the future requirement of

the end-users, a product lifecycle pattern similar to the now experienced FW UAS,

and the more mature manned platforms.

• Current Estimate of Market Size for VTOLs

The market for VTOL UAS systems is in its early stage. Requirements seem not to

be clear amongst end-users, who mostly are conducting experiments with the

technology today. Technology reliability is still the key factor to convince end-users

of the benefits of VTOL systems, and to assist them to better shape their

requirements. Frost & Sullivan research indicates that the main end-users for VTOL

UAS are military and civil operators, each with different drivers and challenges. The

civil domain does not yet represent a real market given airspace regulations and

certification issues. However, once regulations come into place (likely around 2017)

the market will see a major boom. As for the Military / Defence, particularly

developed nations (those who historically adopt new technologies and logically are

initial customers) are today heavily suffering from budget limitations. Research

indicates that Advanced / Modern Armed Forces want to deploy VTOL systems.

However, technical requirements (again reliability as the key factor) are yet to

impress military operators and convince budget holders of its cost-benefits. As

noted earlier, maritime patrol (persistence and tactical surveillance) is the key

application for the military. The table below presents the Frost & Sullivan

assessment of the main VTOL applications across market verticals.

Over the period 2011-2020, Frost & Sullivan research indicates circa 300 VTOL UAS

units to be inducted across the globe. Defence and Security applications in the Asia

Pacific markets are expected to create a leading demand for VTOL UAS, accounting

for more than a third of the total demand over this decade.

Frost & Sullivan

research indicates that

the main end-users for

VTOL UAS are

military and civil

operators, each with

different drivers and

challenges.

Frost & Sullivan

Natural Disaster

Army Air Force Navy Law Fire Fighting Monitoring

Enforcement / Safe Cities

Defence Security

• Border

Security

• Convoy

Protection

• Force

Protection

(bases)

• Counter-IED

• Climate

Monitoring

• Aerial

Photography,

Mapping and

Surveying

• Seismic Events

• Major Incident

and Pollution

Monitoring

• Forest Fires

• Urban Fire

Tactical Support

• Persistent

Surveillance

• Recce

• Maritime

Patrol

• Anti-Piracy

• Search &

Rescue

Support

• Border

Security

• Coastguard

• Emergency

Rescue (e.g.

Mountain

Rescue)


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Figure 5: VTOL UAS Applications Overview for Defence & Security

The volatility of the Middle Eastern region, and the need to protect the critical oil

reserves, boosted by the recent relaxation of US regulations in selling unmanned

systems to the region has lead to the procurement drive for UAS. Research

indicates a move towards procurement of VTOL UAS aimed at maritime patrol and

law enforcement requirements.

Withdrawal from Afghanistan will temporarily temper the demand for procurement

of new technologies / products such as the VTOL UAS in both US and European

markets. However, this is mainly expected to last over the current decade, which

can be considered as platform validation phase for VTOLs across multiple end-users

and applications.

Figure 6: Total VTOL UAS (Military) by Region (cumulative units), Global,

2011-2020

The VTOL UAS markets in the US and Europe are expected to experience a boom

post 2020, when the existing fleet of UAS is expected to be upgraded or changed,

giving way for a mixed fleet of FW and RW UAS complimenting the manned

platforms.

Frost & Sullivan

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Figure 7: Total VTOL UAS (Military) by Region (Units- Planned /

Anticipated Programs), Global, 2011-2020

Please note that the above forecast includes planned and anticipated UAS systems as

of 2011. The forecast considers VTOL UAS within the following classifications;

- Range (km): up to 200

- Altitude (ft): up to 20,000

- Endurance (hrs): 5-8

- Weight (kg): up to 1430

The current market might present a fragile outlook, with most VTOL solutions in

development stage. Frost & Sullivan anticipates that the industry and the end-users

would overcome the interim challenges - technical, regulatory, and operational over

this decade. Frost & Sullivan envisages that the desire to modernise the armed

forces, and plans to enhance the in-country capabilities, especially in emerging

countries such as India and Brazil will drive procurement of VTOL UAS in both

defence and security domains. Recent procurements in the Middle East indicate, in

the short to midterm, a greater potential for uptake of such technologies, in

comparison to the western nations.

This is mainly due to the ongoing economic crisis, and somewhat higher importance

to regulatory frameworks in the western nations. The experience gained in the new

markets is expected to contribute towards the validation and eventual adoption of

VTOL UAS in the wider markets.

The experience gained

in the new markets is

expected to contribute

towards the validation

and eventual adoption

of VTOL UAS in the

wider markets.

Frost & Sullivan

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frost.com15

The figure below presents the global demand for VTOL UAS in the long-term.

Figure 8: Global Demand Map for VTOL UAS

3. AN ASSESSMENT: ADOPTION OF VTOL IN DEFENCE & SECURITY

3.1. Operational factors impacting adoption of VTOLs

Prohibitive Frameworks Impeding Adoption

When it comes to regulations and operational standards, including integration into

the Civil airspace, VTOLs are up against similar challenges to that of the FW UAS.

Current regulatory frameworks limit the deployment of UAS in most missions

pertaining to security domain. VTOLs could have a slight advantage in this context

wherein they are deployed in localised areas, in a segregated space. In context of

Military operations, where most missions are within segregated space, the impact

of regulations is somewhat limited. However, defence and security applications in

some regions interface seamlessly, especially when considering border surveillance

and coastal patrolling. In such markets it is crucial that the key regulations are

defined prior to adoption of UAS into active service.

In consideration of these limitations, most civil applications are, as of today, based

on VLOS (Visual Line of Sight) missions. However, it is anticipated that the ongoing

industry efforts, mostly in Europe and the US, will lead to much defined regulatory

framework when it comes to operating UAS in civilian airspace. Frost & Sullivan

research indicates a potential adoption of such guidelines around 2017. When it

comes to certification, the ongoing work within this area is promoting the

adoption of most (relevant) certifications that are applicable for manned

platforms. However, when considering the UAS systems, the certification process

becomes more complicated.

Frost & Sullivan

High Demand Markets

(> 20 VTOL Systems)

Medium Demand Markets

(5 < 20 VTOL Systems)

Low Demand Markets

(< 5 VTOL Systems)


frost.com 16

The complexity is primarily driven by the need to certify the total system

(platform, data links, and control station), only then a UAS is certified to fly. The

time and cost effort involved can make the UAS solution prohibitive for both the

industry and the end-users. Frost & Sullivan research indicates a high level of

optimism within the industry when contemplating the impact of defined regulations

and certifications on the adoption of VTOLs within the civil security domain.

However, the end-users are somewhat skeptical of the specific impact for VTOLs,

although they anticipate a larger participation of UAS (RW / FW) post

implementation of defined regulations. In the chart below Frost & Sullivan

summarises the potential roadmap for defining and implementing regulations and

certifications for UAS, and the principal factors governing the evolution of the

European civil UAS market.

Figure 9: Principal Factors Governing the Evolution of the European

Civilian UAS market

VTOL manufacturers for starters should ensure that the systems are ceritified

within the existing framework. Frost & Sullivan research indentified the NATO

Standardisation Agreements for procedures, systems and equipment components,

STANAG, as most relevant available / starting point standards to be considered in

developing UAS, including VTOLs, this includes;

- STANAG 4660: Interoperable Command and Control Data Link

- STANAG 4670: Training Requirements

- STANAG 4671: UAV Systems Airworthiness Requirements

- STANAG 4586: Data Link Interface, and Command and Control

Interface

It is essential to provide a certain degree of flexibility when designing the systems,

such that the system can be adapted to national level standards with limited impact

on system cost and / or capabilities.

Frost & Sullivan

ATM and Airworthiness Certification (EUROCONTROL and EASA)

Evolutionary development of a regulatory framework governing usage of civilian UAS in European controlled airspace (based on MASPS,

then MOPS produced from EUROCAPE’s WG-73 and RTCA’s SC-203 recommendations)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

and beyond

Ad hoc Exemptions on demand are replaced by the phased introduction of

standards and regulations, each with limited coverage, as and when these are

agreed and become available

Regulation (EUROCONTROL)

Roll-out of comprehensive

legislation which emerges from

the above recommendations

No national, European nor global

strategy or framework for UAS RF

allocation. (Local, ad hoc

allocations on demand)

Radio Frequency (RF Spectrum and Bandwidth Allocation (ITU)UK only = Ofcom. Initial discussions and proposall towards agreement on spectrum allocation of

RF bandwidth for European Civillian UAS at ITU conference (WCF) in 2011. Availability ofspectrum possible from 2015, meanwhile EDA looking at an interim solution for Europe

Emerging Propulsion and Materials Technologies

Introduction of fuel cells and revolutionary aerodynamics such as variable aerofoil and increasing use of lighter,

composite materials


Technology (EDA, EUROCAE)

EDA project to develop working S&A, datalinks, including for C2 etc.

frost.com17

CONOPS driving platform selection: Vice versa is a no-go strategy

Frost & Sullivan research brought forth a key concern of the end-users, who are

challenged by the Industry pitching high tech platforms, with limited insights into

the CONOPS and the related requirements. End-users engage better with capability

based solutions that reflect the core mission and operational requirements,

generating a higher value proposition. The expeditionary nature of today’s missions

could benefit from the VTOL capabilities, which enables rapid response to high risk

scenarios. Ability of the VTOLs to be deployed rapidly, from most terrains, including

mobile platforms is seen as a convincing capability to deploy within the military

environment. However, end-users are aware of challenges, which have traditionally

limited the deployment of RW platforms in specific missions only, and impose

similar limitations on the deployment of VTOLs. These include comparatively slower

speeds, with limited endurance when pitched against the FW UAS.

Frost & Sullivan discussions with the end-users indicate that VTOL capabilities are

best fit for specific missions. Missions requiring sustained / focused surveillance and

maneuvering flexibility benefit from the VTOL ability to hover on defined mission

targets, and may not be relevant for FW solutions. The ability to conduct ‘stop & go’

missions independent of the terrain enables VTOLs to be deployed as a significant

force multiplier. End-users have indicated the effective use of VTOL as dormant

assets across enemy lines, activated in event of a situation / conflict. Recent

development plans have focused on using the VTOL platforms for logistics tasks,

although this may for now be focused on in-theatre requirements, operating in a

defined segregated space. There is much a-do about deploying VTOLs for MEDEVAC

missions, including a NATO programme exploring similar options. However, the

cost of certifying a VTOL UAS for manned operations, for now is considered

prohibitive. Significant work needs to be undertaken to:

- design reliable systems for manned operations;

- resolve operational challenges of conducting life saving operations

in high risk scenarios;

- overcome general perception of deploying UAS for manned

operations.

VTOL may not be the most suitable platforms for large area coverage, due to the

comparatively lower endurance levels (this is an end-user perception despite

introduction / ongoing development of some longer endurance VTOLs). Taking for

example maritime missions, at present the most relevant applications for VTOL are

focused on short mission runs, including providing better situational awareness in

event of anti-piracy missions. The wider end-user perception is that deploying VTOL

on long endurance missions may not be as cost efficient as deploying FW UAS. Most

VTOLs are categorised under the TUAS segment, which brings forth an operational

limitation, such that the flight ceiling of VTOLs makes them vulnerable to ground

attack.

End-user inhibitions in deploying VTOLs / UAS primarily stem from the dilemma of

how the system can be deployed within the existing and future requirements of a

mission. Industry’s ability to clearly state the capabilities of the VTOL systems in

terms of ‘See, Sense, Strike’ need to fit the operational requirements of a mission.

Taking the case of an anti-piracy mission, it is critical to understand the end-user

mission requirements.

End-user inhibitions

in deploying VTOLs /

UAS primarily stem

from the dilemma of

how the system can be

deployed within the

existing and future

requirements of a

mission.

Frost & Sullivan

frost.com 18

Frost & Sullivan’s research has identified some of the key (non-exhaustive) elements

considered by end-users in deploying VTOLs for such missions;

- What does an anti-piracy mission entail- surveillance, deterrence,

engagement?

- What does the end-user want to fulfill this mission- weaponised /

non-weaponised?

- What is the value proposition of the VTOL- rapid deployment;

accessible aerial capability; enhanced situational awareness; cost

efficiency?

Approaching the end-users with a capability focused solution for VTOLs is expected

to create more interest with the main end-user stakeholders. However, the cost

implications of such a solution cannot be overruled. System-up solutions tend to

have longer development cycles, and tend to have higher solution customisation

costs. Cost viability of a proposed solution is essential, and this is not limited to

initial platform cost. The total cost of ownership taking into consideration the

through life operational and sustainment costs are primary elements to consider.

Research indicates that although there is not much flight data available on VTOLs

when compared to FW UAS and / or manned platforms, the available information

indicates a lower through life cost for VTOLs. This is primarily linked to the logistical

footprint required to operate and deploy VTOL, such as limited take-off / landing

mechanisms / areas, and comparatively reduced number of man hands (mostly due to

the limited-endurance mission types).

Figure 10: Technical Challenges and Benefits in Successful Deployment of

VTOLs

End-users within the security domain have highlighted a need to deliver significant

cost benefit, such that the stakeholders can substantiate the decision to select a

VTOL UAS solution to meet a specific operational requirement, which traditionally

has been delivered using substitute technologies including manned platforms. One of

the main considerations for end-users in this regard is to overcome wider public

perception of deploying unmanned systems in urban and rural areas in return for

evident cost and operational benefits.

Frost & Sullivan

Technical Matrix

Innovation Opportunity Enabler

Disabler Improve

Operational Cost

Through Life Cost

Modularity

Deployability

Hovering

Logistical FootprintConfigurability

Endurance

RangeSystem Customisation

Maintenance Cost

Operational Complexity

Efficiency

Airspace Integration

Flight StabilityWear & Tear

Aerodynamics - Drift

Stealth Mode

Noise Levels

Vibration

HIGH

LOW

CHALLENGES LOWHIGH


BENEFITS

frost.com19

On assessment of technical challenges and benefits, although non-exhaustive, the

primary interviews across industry stakeholders identified parameters that could

further facilitate adoption of VTOL UAS across various end-user environments.

Frost & Sullivan analysed and categorised these parameters across four quadrants,

as explained below;

• Enabler: The industry should show-case these as drivers for adopting

VTOL UAS, emphasising the positive impact in fulfilling end-user mission

requirements.

• Innovation Opportunity: Needs ongoing R&D investment to position

them as primary enablers for VTOL UAS

• Improve: Industry should focus on improving technologies and processes

to evolve as technical Enablers.

• Disabler: The industry needs to overcome the challenges, or introduce

substitutes, and/or minimise negative impact for these parameters.

3.2 Technical challenges and benefits in successful deployment of VTOLs

Frost & Sullivan research indicates that the industry needs to focus on addressing

the immediate concerns of the end-users, whilst show casing the ‘enabler’ for VTOL

UAS. End-users indicated industry initiative in resolving CONOPS related issues to

start with. Limited modularity is one of them, and is an important factor to

consider. Modularity is not limited to payload modularity, this need to consider and

include other components of the system such as data links, control elements,

support elements etc.

Such that the system can be adapted to a specific mission. Modularity for VTOLs is

somewhat restrictive, due to on-board space constraints. Features such as ease of

deployability, hovering capabilities, mobile platform launch are considered unique

value propositions for VTOLs, and make them a preferred choice of inventory for

specific missions requiring these capabilities. However, some inherent challenges of

the RW platforms migrate onto the VTOL perception, although just like the RW

platforms end-users are accepting the fact that immaterial of some limitations, the

benefits of VTOLs outweigh the challenges for niche (and critical) applications.

3.3 Critical Success Factors: Potential business models for VTOLs

In discussions with main industry and end-user stakeholders, Frost & Sullivan

identified the most critical success factors (CSF) considered when selecting VTOL

UAS for defence and security applications. End-users across defence and security

emphasised ‘CONOPS’ as the leading CSF driving procurement and deployment of

VTOL UAS. Industry is expected to present a complete understanding of the

mission requirements, and prove the technical and operational feasibility of the

system on offer.

End-users across

defence and security

emphasised

‘CONOPS’ as the

leading CSF driving

procurement and

deployment of VTOL

UAS.

Frost & Sullivan

frost.com 20

Figure 11: Frost & Sullivan Survey on Critical Success Factors impacting

the Selection of VTOL UAS for Defence & Security Domains

Taking into context the operating environments of the two domains, and the

existing capabilities, it is not surprising that defence stakeholders have a higher

rating for supplier heritage, which indicates confidence in engaging with established

OEM solutions over other somewhat exploratory participants, at least for now.

However, it is anticipated that security domain is going to be more open to a

broader supplier choice independent of OEM heritage.

Reliability is considered as a given must-have, although it is interesting to note that

end-users across both domains accept the nascent stage of the VTOL UAS, and are

open to gaining flight heritage in operations. However, some end—users’

empahsised the importance of having reliable, proven systems on board these

platforms, such that technology, although adapted and ruggedised for defence and

security environment, has been validated in tangent industries, and / or is supported

with significant test data.

Another factor that has been given a higher rating from defence end-users is system

redundancy. This is mainly driven by the need to operate in extreme environments,

across mission critical and highly sensitive applications. However, the cost

implications of providing a redundancy based system design are yet to be validated.

In light of the ongoing economic crisis it is not surprising that the Total Cost of

Ownership and Through Life Support are considered a CSF across the defence and

security domains. Frost & Sullivan understands that the various models available

and/or being considered in regards with VTOL UAS are similar to the wider UAS

systems.

Frost & Sullivan

Rating scale- '1' Least Important; '5' Most Important


frost.com21

Figure 12: VTOL UAS Market: Identified Business Models, Global, 2012

Type-1: Direct Deal: The end user procures equipment directly from

the manufacturer, both domestic and foreign.

Type-2: Local Partner: The foreign supplier enters into an agreement

with a domestic partner to tap market opportunities.

Type-3: Equipment Rental/Lease: The supplier rents/leases the

equipment to the end user directly.

Type-4: 3rd Party Equipment Rental/ Lease: The foreign supplier

rents/leases the equipment to the end user through a

third party.

The aforementioned business models can be best placed as potential route to

markets, and may vary from market to market. However, these business models

alone are not driving procurement in the defence and security domains. As

mentioned earlier total cost of ownership and through life support are

progressively being adopted as the preferred modes of procurement. The shift

towards alternate contracting models is driven by the end-users expectation to

share risk with the industry, especially when inducting a new solution.

The figure below presents the Risk vs. Revenue analysis across various contracting

models.

Frost & Sullivan

research noted an

optimistic view

towards deployment

of VTOLs to fulfill

mission requirements

across both, defence

and security domains.

Frost & Sullivan

Local Partner

Type-2

Type-1

Type-3

Type-4

End-user procurement based on

Total Cost of Ownership

End User Skeptical

about Technology

High Equipment Cost Lack of Local Expertise

VTOL UAS

Manufacturer End-User

3rd Party


Defence

Security

frost.com 22

Figure 13: Contracting Models- Service Based Contracts

3.4 Benefit Analysis of VTOL UAS

Considering that VTOL UAS have not yet earned significant flight heritage,

conducting any in-depth comparative assessment with the FW UAS and existing

manned systems. Within consideration Frost & Sullivan for this white paper

attempted to conduct an assessment based on industry perception of current and

anticipated levels of technology maturity, operational effectiveness, cost efficiency,

system configurations, and potential applications.

During our survey with the industry stakeholders many observations were shared,

of which some were known, debatable, others somewhat even more debatable than

the others. These included observations / concerns about higher maintenance cost,

integration costs, system complexity- operational and maintenance, endurance and

range, aerodynamics, modularity and configurability, and overall sustainment needs.

Despite the concerns noted by the industry stakeholders, Frost & Sullivan research

noted an optimistic view towards deployment of VTOLs to fulfill mission

requirements across both, defence and security domains. This optimism was driven

by the unique value proposition of the VTOL UAS, which includes payload carrying

capacity vis-à-vis endurance, external payload carrying capacity, ability to hover and

fly, flexible and responsive accessibility and deployability, low logistical footprint,

mobile launch capabilities, perception of overall lower cost of operations due to the

nature of missions- shorter mission hours in comparison to similar size FW UAS,

and lift and drop capability.

Discussions with industry stakeholders, both end-users and suppliers, indicated that

VTOL UAS are widely acknowledged as most suited for niche applications, involving

short to medium range missions, which require a responsive and easily deployable

capability. The low logistical footprint in comparison to the FW UAS and the other

Manned platforms is a significant advantage, both operationally and financially.

Frost & Sullivan

Contracting for

Capability

Contracting for

Availability

Spares Inclusive

“Traditional”

Contractor Revenue

Contractor Risk


frost.com23

However, end-users, based on the perception from manned RW anticipate that the

VTOL UAS are more complex to operate, a perception that is different from that

of the industry. This is mainly because leading industry participants have worked

towards minimising the complexities of the traditional Manned RW when designing

the UAS versions, both in operating and maintaining the systems. However, Frost &

Sullivan research indicates that such an assessment of the VTOL UAS with potential

substitutes is somewhat limited due to unavailability of extensive flight heritage.

Below is a summary of some of the main benefits of VTOL UAS (as noted

throughout the white paper):

• The industry perceives that VTOL UAS with its ability to conduct stop

and go missions, capability to hover and focus on a particular area, and

ability to take-off and land in most terrains presents a unique value

proposition for end-users.

• This ability to conduct critical 'highly responsive' missions independent

of the terrain enables VTOLs to be deployed as a significant force

multiplier, enabling battle commanders to make informed decisions, and

fulfilling expeditionary missions effectively.

• The logistical footprint required to operate and deploy VTOL, such as

limited take-off/landing mechanisms/areas, and comparatively reduced

number of man hands (mostly due to the limited-endurance mission

types) indicates a lower through life costs in comparison to other

platforms.

• End-users are open to exploring and deploying VTOLs in niche

environments and applications including MEDEVAC, crowd control, fire

monitoring and control, and nuclear monitoring, which are not

effectively covered by the existing FW platforms.

• VTOLs are considered an apt solution for operating in high risk,

segregated airspace, which requires a responsive solution.

4. CONCLUSION

4.1 Summary analysis of supply and demand for VTOLs

VTOL UAS are considered at the early stages of the product lifecycle bell curve.

However, industry and end-users have indicated confidence in its evolution,

especially considering the experience it can leverage from flight proven manned

rotary platforms combined with the increasing flight heritage of the FW UAS. The

supplier world has diverse participants with experienced OEMs pitching a corner,

up against the niche and new participants. Frost & Sullivan research indicates a

preference for OEMs over the Niche Participants, although the eventual success is

expected to be driven by accumulation of successful flight heritage across different

markets and end-users. Frost & Sullivan analysis indicates potential merger and

acquisition activity later in the decade, wherein the OEMs will explore

opportunities to expand capabilities in this area through in-organic modes, mainly

aimed at technology/product acquisition.

Frost & Sullivan

frost.com 24

The nearly 300 VTOLs (a conservative outlook) forecast over this decade are

expected to complement the mission inventory of the defence and security end-

users, and this complimentary role is not expected to become competitive to

existing systems in the long-term. However, accessibility to VTOL systems in mobile

and hard to land/take-off areas would potentially reduce the workload on manned

and FW UAS platforms, making them free to focus on other mission critical areas.

4.2 Market Recommendations

The Industry: Product & Technology

End to End Solution, Not just the Platform: The primary recommendation emerging

from Frost & Sullivan research is for the industry to focus on end to end solutions

rather than pitching hi-tech platforms with limited direct relevance to the concept

of operations within the end-users operating environment.

Cost-benefit Analysis of End to End Solution: A related recommendation to

packaging end to end solutions to end-users, is the importance of analysing the true

cost of delivering a particular service / accomplishing a mission successfully and

implying the value add of deploying VTOL UAS in comparison to alternates /

substitutes. The main questions that the industry should aim to answer for the end-

users are;

• What are the mission requirements that the proposed system will be

used for?

• How does the end-user currently deliver this mission?

• Does the proposed system fulfill the end-user requirements?

• What value add does the proposed system bring to the end-users

• Gain efficiency

• Additional capabilities

• Force Multiplier

• Cost efficiency?

System Configurability: The industry needs to develop flexible, easy to use

platforms that are scalable and modular. However, ability to configure systems fit for

purpose, apt to be adapted to multiple missions within a quick turnaround time is

considered as a primary feature for end-users.

Market & End-users

Leading markets: In the coming decade emerging markets such as the Middle East

and Asia Pacific are expected to provide for the much needed test beds. However,

it is the US and the European markets that are expected to drive technology

development and validation for a sustained adoption rate in the long-term.

Industry to work towards overcoming the regulatory issues: The evolution of the

Civil Security domain for VTOL UAS is optimistically debated. However, the

industry is of the unanimous view that any such spike in demand will only

materialise with concrete resolution on the regulatory frameworks at all levels,

global, regional and national.

Another concern that

the industry needs to

actively win over is

the public perception

on deploying UAS in

the local skies, for

task that have been

till date somewhat

‘effectively’ delivered

by substitutes.

Frost & Sullivan

frost.com25

The industry is encouraged to continue with its efforts to build a convincing

argument in favour of opening the skies for integration of UAS into civilian airspace.

This is by any measure not considered an easy task. Although the progress made

with ongoing programmes, especially in Europe and the US are considered positive

steps in the right direction. Frost & Sullivan research indicates an initial adoption of

such new standards in the later half this decade, giving way to a more aggressive

adoption of UAS (including VTOL UAS). Finally, another concern that the industry

needs to actively win over is the public perception on deploying UAS in the local

skies, for tasks that have up to now been somewhat ‘effectively’ delivered by

substitutes.

4.3 Next Steps: Potential Roadmap of VTOL UAS

Frost & Sullivan discussions with the industry stakeholders presents a potential

roadmap of VTOL UAS. Using the cliché- the potential roadmap for the VTOL UAS

rests on the four pillars of evolution across the two universes, the End-user

Universe and the Industry Universe.

1. Understanding the mission requirements of the end-users

2. Introducing the solution to end-users by increasing the level of

awareness of the solutions value proposition.

3. Whilst the industry continues its efforts towards optimum technology

maturity

4. Generate economies of scale driving cost effectiveness for the end-

users

Figure 15: Road Map for Technology Adoption Critical Factors Dictating

the Adoption of VTOL UAS (Defence and Security Domains)

Frost & Sullivan

Where End-Users Stand (Average of Defence and Security)

Where Industry Stands

Analysis

on

End-Users

Analysis

on

Industry

Adoption

of VTOL

UAS

Level of Awareness Technology Maturity

Mission Requirements Cost-Effectiveness

Low Low

Low

Low


frost.com 26

End-user Universe:

Research indicates that the end-users although acknowledge the potential for

deploying VTOL UAS, somewhat still lack the awareness of the measured benefits

for specific mission requirements in comparison to alternate solutions. End-users

are not averse to the technology maturity and cost-effectiveness, as they can relate

these from the experience on Manned RW and FW UAS.

Industry Universe:

Industry is recommended to develop and propose VTOL UAS with focus on the

mission requirements, whilst working closely with the end-users to optimise the

deployment of VTOL UAS, in terms of operational, technical and cost effectiveness.

5. GLOSSARY

A&D Aerospace & Defence

ATM Air Traffic Management

C-IED Counter- Improvised Explosive Device

CONOPS Concept of Operations

COTS Commercial Off The Shelf

CSF Critical Success Factors

DGA Directorate General of Armament

EASA European Aviation Safety Agency

EDA European Defence Agency

EUROCAE European Organisation for Civil Aviation Equipment

EUROCONTROL European Organisation for the Safety of Air Navigation

FW Fixed Wing

HALE High Altitude / Large Endurance (UAV)

HAZMAT Hazardous Materials

HQ Head Quarters

MALE Medium Altitude / Large Endurance (UAV)

MASPS Minimum Aviation System Performance Standards

MRO Maintenance, Repair and Overhaul

NATO North Atlantic Treaty Organisations

OEM Original Equipment Manufacturer

PBL Performance Based Logistics

PEST Political Economic, Social and Technical

R&D Research & Development

RF Radio Frequency

RFP Request For Proposal

RW Rotary Wing

S&A Sensor & Avoidance

STANAG Standardisation Agreement (NATO)

TCO Total Cost of Ownership

TUAV Tactical Unmanned Aerial Vehicle

UAS Unmanned Aerial Systems

UAV Unmanned Aerial Vehicle

US United States

VHALE Vertical High Altitude / Large Endurance (UAV)

VLOS Visual Line of Sight

VTOL Vertical Take-Off and Landing

Frost & Sullivan

28

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Documents

UNMANNED VTOL SYSTEMS: An Assessment of VTOL UAS Adoption in the Defence & Security Sector