The airspace above West Michigan could become considerably more crowded now that a new federal ruling makes it easier for companies to use drones.
Industry insiders believe the new Federal Aviation Administration (FAA) regulations will open up an already booming market for drones or unmanned aerial vehicles (UAVs), allowing companies in sectors ranging from agriculture to homeland security to use the technology in new and innovative ways.
For manufacturers of UAV platforms and equipment, the new regulations could vastly expand their customer base, putting drones into the hands of more businesses and hobbyists.
“My impression is that you’re going to see a rush of a lot of organizations getting into drones on the operation and innovation side,” said Alex Bloye, director of aviation at Northwestern Michigan College in Traverse City. “Allowing more people to join in the industry is really a good thing in this case. Up until now, you’ve had a few key players that could do it, but the reality is that a lot of people have been doing it regardless of the regulations. Now it gives people a safe place to play.”
While it’s unlikely that people will see fleets of drones buzzing overhead anytime soon, businesses can now skirt previous regulations that required operators to obtain a private pilot license or undergo a lengthy exemption process to fly the aircraft legally.
For groups like the Michigan Farm Bureau, the new regulations ease the financial burden and time required for its members to use drones. Many agribusinesses cited cost and time as two factors preventing them from adopting drone technology in their operations, said Kate Krepps, a field crop specialist with the Michigan Farm Bureau who follows the drone industry.
“You’ve eliminated two really large barriers for folks who want to actively engage in agriculture to utilize this,” Krepps said. “It opens a window to utilize the technology in a way that we really hoped to, and in some ways that we haven’t even thought of yet.”
Farmers and other agribusinesses can use drones to spot-treat certain parts of their fields for disease and insects, take overhead infrared imagery to examine crop health and many other applications, according to Krepps.
The new regulations, which take effect in late August, require drone operators to hold a remote pilot airman certificate and pass an aeronautical knowledge test, take a training course or be under the direct supervision of a remote pilot certificate holder. Drone pilots can also apply for a temporary operator license.
The new regulations limit UAVs flown for commercial use to weigh less than 55 pounds, fly within visual sight of the pilot, stay below 400 feet and operate only during daylight hours.
Companies can still apply for an exemption from the FAA if they need to go outside the regulations, industry sources said.
While most businesses laud the new regulations as a step forward, some industry insiders say the federal laws still unnecessarily constrain the use of drones and inhibit innovation. For example, the line-of-sight requirement has temporarily dashed Amazon and other retailers’ plans to deliver packages via remote-controlled drones.
For her part, Krepps points to the FAA’s UAV weight limits as being prohibitive for farmers who want to spot-treat large swaths of their fields with chemicals deployed from drones.
“While very valid, (the regulations) limit the opportunity in the industry,” Krepps said. “We hope to continue to refine and work in conjunction with the FAA on some of those particular pieces to see if there is opportunity moving forward.”
FOCUSING ON A NICHE
While many companies are currently building drone airframes for general use applications, the real opportunity comes in engineering drones for very specific niches, according to sources in the UAV industry.
For example, Traverse City-based Interactive Aerial Inc. developed its Legacy One drone specifically for interior inspections of chemical and oil storage tanks and other applications.
“We chose petrochemicals as an industry and wanted to go with that small niche market (because) that’s how companies that wish to differentiate themselves create a market,” said Pierce Thomas, COO at Interactive Aerial.
The FAA does not regulate UAVs operating indoors.
Thomas is a graduate of Northwestern Michigan College’s Unmanned Aerial Systems program.
Legacy One features sense-and-avoid technology that allows it to maneuver in tight spaces while minimizing the risk of a crash. The company hopes to launch a commercialized version of its product by the end of August and is currently working with initial customers to finalize development, Thomas said.
In the long-term, Thomas said Interactive Aerial plans to build a small customer base before ultimately being acquired by a larger company, similar to what happened with Aetos Group Inc., formerly of Traverse City.
Aetos Group, a drone-based inspection company, originally formed out of Northwestern Michigan College’s program before being acquired last year by The Mistras Group (NYSE: MG), a New Jersey-based asset protection company. The company has since moved its headquarters to La Porte, Texas.
Bloye of Northwestern Michigan College also believes that drones for specialized uses will be the largest growth market in the industry. The community college is currently investing in equipment such as UAV-based sprayers for the agricultural industry and developing specific programming for students who want to specialize in certain industries.
As of April 2016, sales of drones grew 224 percent on a year-over-year basis, with many consumers buying directly from manufacturers, according to a report by the NPD Group Inc., a New York-based market research firm.
UAV industry watchers believe drone technology has the potential to become a disruptor in a number of sectors globally.
For example, the technology could likely replace helicopters and small aircraft as a more cost-effective method of detecting speeders on roadways, surveying electrical lines and conducting traffic reports, said Gavin Brown, executive director of the Michigan Aerospace Manufacturing Association (MAMA).
Helicopters and small aircraft cost upwards of $650 per hour of operation, while UAVs cost around $150 per hour of operation, Brown said.
“West Michigan UAV companies have the ability to get in on the ground floor as opposed to trying to knock off an incumbent source,” Brown said. “You’re going to see some small companies grow rather dynamically.”
Elsewhere, Walker-based general contractor Triangle Associates Inc. has used a drone for roughly two years to conduct overhead surveys for roof and other repairs. Primarily, Triangle’s decision to use the drone comes down to the safety and cost factor, as it eliminates the need for workers to climb onto or hang over buildings, said Vice President Jim Conner.
“It’s a new tool the guys are using in the field to make things safer and faster,” Conner said.
Triangle is currently experimenting with using drones to conduct photo mapping so the company can build a digital 3-D model of a worksite.
GREY AREAS REMAIN
While the updated FAA regulations have been long-awaited by the UAV industry to clarify some of the ambiguity surrounding drone operation, the laws still contain grey areas, particularly when it comes to issues of liability.
With manned aircraft, fault in the event of an accident or crash is determined by examining if the pilot was operating the aircraft in accordance with safety parameters set by the manufacturer and the FAA, said John Geisen, a senior broker serving the aviation market for Aon plc, a Minneapolis-based risk management and insurance broker. However, drone manufacturers aren’t required to establish safety parameters, nor does the FAA require drone manufacturers to obtain an airworthiness certification for the aircraft.
Geisen said that a lack of manufacturer input will likely cause companies using drones to invest in insurance policies on their aircraft and for operators.
“Some suggest that this will shift more burden onto the operators,” Geisen said. “I don’t see the insurance mandate changing. That will be driven by the people who want to protect assets.”
Editor's Note: This story has been updated from a previous version.