Economic Forecast

Dr. K.C. Wong at the University of Sydney Department of Aeronautics, in the mid 1990's, published a series of papers on UAV use. In one paper, "UAV's over Australia", he states " It is generally accepted in the global aerospace industry that technologies required for autonomous capabilities for Unmanned Aerial Vehicles (UAVs) are mature enough for more widespread use. Market surveys predict a significant increase in UAV usage over the next five years, when the strong growth in the military applications market would start to settle, while the market for civilian UAV applications is predicted to grow significantly." Dr. Wong goes on to summarize the state of UAV's in Australia and their prospects and pitfalls in this paper and a related publication entitled UAV's in Australia: Are we ready for them? Are they ready for Us?.
Flight International reported in their 19-25 July 1995 issue the following: “Nearly 8000 unmanned air-vehicles (UAVs) worth $3.9 billion [US$], will be produced worldwide between 1994 and 2003. The reconnaissance market is expected to double in size over the ten-year period, according to the Teal Group’s UAV annual forecast."

The forecast released at the 1995 unmanned-systems show organised by the Association of Unmanned Vehicle Systems in Washington DC, estimates that 5250 target drones worth $1.3 billion and 2650 reconnaissance systems worth $2.6 billion will be procured during the decade. The estimate does not consider the cost of related hardware such as groundcontrol stations. It only covers air-vehicle costs, which constitute as little as 15% of many UAV systems.” P. Spanoudakis, L. Doitsidis, N. C. Tsourveloudis, K. P. Valavanis published this Market Overview of the VTOL UAVs in 2003 (see  PDF for Unmanned Systems Publication).

More recent forecasts are summarized in the attached table. Estimates range from The Teal Group - Aug 2004  ( $4.5 Billion a year by 2014 (Mil and Civil), Frost and Sullivan Oct 2003 ( $5.5 Billion Euros by 2012), and Larry Dickerson of Forecast International predicts ($13.6 Billion by 2014 - Massive Growth in 2010) with US firms garnering 50% of this market with growth in market share in a range of  an additional 5010% over the next decade. More than 9,000 UAVs are to be purchased over this time. This 2010 time frame corresponds to the expectation of SFAR-02 following certified collision avoidance deployment heralding the accelerated use of Civil UAV flight. The DoDforcasts that fully one third of its strike force will utilize UAVs by 2010. Forecasts specify airframe and avionics as capital expenditures. This does not take into account services, payloads, and aftermarket parts and those components should increase the forecast amount by at least 25% annually. Finally, at the Shephard Unmanned Vehicles Conference just prior to the last Paris Air Show, UAV potential in Europe alone was estimated to grow by 11% between 2005 and 2014 to 4.9 Billion EUROs.
Cost Effectiveness versus Manned Missions - The VERY LARGE ELEPHANT IN THE ROOM is the topic of cost benefit of UAVs over manned flight vehicles for any given mission profile. Unfortunately, to date, very little is known about cost benefit data versus manned missions.

From a military perspective, where cost is not paramount when it can save the life of a pilot, UAVs are a no brainer as a force multiplier. The sticking point in the adoption cycle is related to the ersatz Icarus Syndrome - acceptance of UAVs by pilots. Some cost/benefit work has been done in this area. For example UAVS do not require incremental pilot related cost elements such as displays and instruments, ejection seats and environmental controls. Airframes are smaller and lighter and can be designed more aerodynamically efficient, so all component costs including power plant costs are lower. Fuel consumption is much lower. A recent USAF study (2005) by Major Jim Hoffman, titled At The Crossroads: Future "Manning" for Unmanned Aerial Vehicles" (Maxwell AFB) reported the cost of training (15) B-52 pilots (average $685,051) versus (15) UAV operators (average $13,000) - not precisely apples to apples - but the cost savings was clear.

Only part of these savings translate to civil UAV cost of operations. Cost comparison data is almost non existent and if it were available it would not be useful for the following reasons. Most UAVs flown for commercial use to date are experimental test bed programs. Platforms and payloads are non standard, and are specially configured for the mission. Airframes are not used efficiently. More time is spent on the ground preparing payloads or mission profiles to ensure mission success than is spent in flight. In March of 2005 NASA completed an evaluation on the Cost and Business Model applicable to HALE UAVs for Scientific Research (Full Report here). The report was commissioned to determine a make-buy decision for future Scientific UAV Research operations. The report concluded that, for now, HALE aircraft are the only "practical niche for NASA to transition to UAV flight services" and that "UAV civil science missions will remain a niche market in the US". The report states that evaluating cost on the basis of marginal cost per hour ignores most of UAV related costs and accounts for only 25-30% of total cost for flight services. Total flight service cost per mission is a better metric because it does not hide cost related to payload configuration and non flying time overhead - due to the inefficiencies mentioned above.

To achieve better cost comparison data the industry is awaiting a few key milestones such as the arrival of turnkey, mission ready, mission specific payload/platform coupled with certified DSA and airworthiness technology, integrated into the airframe with functional ground control systems, at reasonable cost (i.e. - costs the market can accept).
Until platforms are standardized, turnkey in nature and mission specific, meaningful cost of operations comparative data will not become plentiful or meaningful.
UAVs in the NAS are inevitable and likely imminent. Cost benefit and economic analysis should be separated from organizational priorities (politics) or whatever is driving AOPA to approach members of the Congressional Oversight Committee of the Department of Homeland Security on the subject of UAV economics while an AOPA representative, co-chairs the RTCA SC-203 Committee in its effort to arrive at MASPS for UAVs.

Further, simplistic analysis contaminates this important cost benefit discussion. The report states the Hermes 450 has operational costs of about $1,350 per flight hour while the Hunter costs about $923 per flight hour to operate. It is not stated how these figures were calculated. An accepted normalized formula is necessary in order that comparative data can be used to analyze cost benefit for both manned and unmanned systems. Only then can total flight service cost per mission data be acquired, analyzed, and used to normalize this discussion.

Standardization of equipment, economies of scale in manufacturing, and normalized operational mission, (SOP’s) will reduce total lifecycle costs to levels that make UAV use a more cost effective approach for many missions. This report did identify one flaw in the first configuration evaluated. The alarm sensors on were not coupled to the ISR cameras so that visual confirmation was relegated to a ground base patrol mission. False positives are very costly in this regard as land based personnel are deployed to investigate.