Devin Card Professional Photographer in Victoria BC

250-419-1506
Devin Card Professional Photographer

How Will FAA Drone Regulations Impact Small Businesses in the United States?

As small businesses anxiously await the FAA’s rules for small unmanned aircraft systems (sUAS), many are fearful that the rules may force them to leave the market or abandon plans to enter the market. Colin Snow, a drone industry analyst surveyed small businesses in the middle of last year and asked about what those small businesses feared, and how those small businesses might react to different FAA regulations. This post provides a summary of his more detailed research report.

Snow’s survey had 297 validated respondents, representing sUAS companies whose revenues spanned from $100,000 to more than $10 million. More than half (59%) of the respondents were either owners, principals, or employees of an sUAS commercial product or service provider.

Here are six key insights excerpted from his research report:

Insight 1 – Understanding of current FAA rules varies widely.

When it comes to the use and operations of sUAS for commercial purposes in the U.S., most businesses are unsurprisingly very unclear about current FAA policies. Over two-thirds of respondents indicated as much when asked a direct question about clarity. This fact is verified by the wide variety of answers received when asked under what conditions they think it is currently legal to operate sUAS. While almost half (44%) think they needed an FAA Certificate of Authorization or Waiver (COA), 30% think the FAA does not regulate Class G air space, and 25% think they can operate as long as they are granted a 21.25 Restricted Category certificate.
Insight 2 – Companies operate anyway.
Despite the lack of clarity, almost one-half (47%) of respondents say they operate their sUAS in Class G airspace today. Of those almost two-thirds (64%) have been doing so for two or more years and 34% for more than five years. This observation is confirmed by the revenue data from U.S. operations. While almost two-thirds (63%) reported revenue last year was under $100,000, 13% said it exceeded $1 million. From this, Snow concluded that operations in the current market are not small in size and, for some, revenue is quite substantial.

Almost half of drone related businesses indicated that they would hire two or more full-time employees (FTE) in the next year if the FAA promulgates favorable regulations. (Source: DroneAnalyst.com)
Almost half of drone related businesses indicated that they would hire two or more full-time employees (FTE) in the next year if the FAA promulgates favorable regulations. (Source: DroneAnalyst.com)

Insight 3 – Aerial photography and cinema dominate current services.

The survey shows clearly that aerial photography and/or video combined with cinematography / movie / TV dominate both current and future service offerings at 41%. The next largest group–at 11% of respondents—is sales of small UAS aircraft and technology. About eight percent of participants identified themselves as offering or wanting to offer agriculture / farming services. This runs contrary to other reports that indicate this will be the largest market. Snow determined that while most companies (63%) reported revenue of under $100,000 last year, 13% reported in excess of $1 million in revenue. When viewed through the lens of each service provider type, this data offers some interesting insights. For example, the largest group of service providers, aerial photography and cinematography, have current revenues that spread across the whole range (from zero to over $1 million). In fact, three reported revenue over $10 million, a figure no other group reported. This indicates the shadow market revenue is not small and is, in fact, quite large in some cases.

Insight 4 – Few operators employ commercial liability insurance.

The survey finds that almost two-thirds (62%) of businesses operate without commercial liability insurance for their sUAS. One reason for the low engagement may lie in the difficulty of obtaining insurance for negligent operation of a UAS aircraft. Civil UAS operation is relatively new, and the group may be too small for most aviation insurance carriers to take an interest. Even so, carriers do exist, and policies are available.

Insight 5 – Favorable rules will create economic growth.

Only 10% of respondents said they wanted no rules in place. However, the other 90% picked just two potential regulations they considered favorable for business. Those two are: 1) an agreement to operational guidelines for self-regulation and, 2) a self-declaration of intent, aircraft, general location, and use. All others were considered unfavorable. The survey explored the micro-economic implications of immediate introduction of favorable regulations. Findings indicate almost two-thirds (62%) of businesses on the sidelines would start immediately, and another 24% would start within one year. The significance of this data can’t be overstated. It says that 86% of businesses are being held back by the current policy environment. This fact is underscored by the fact that 42% would hire two or more full-time employees (FTE) in the next year. Under favorable rules, companies project growth in all revenue bands.

Insight 6 – Unfavorable rules will kill the market.

The survey also investigated the impact of unfavorable future regulations. Respondents indicated that five types of FAA regulations on sUAS commercial operations would be unfavorable for their business. Among them were requirements for pilot licenses and COAs. In fact, 61% of respondents would likely not start or shutter their existing business operations if those unfavorable FAA regulations were in place. In light of this finding, Snow concluded the overall market for sUAS would basically disintegrate if unfavorable regulations come into being. All the positive economic impacts like revenue, job creation, and tax base creation—not to mention the practical benefits of drone business services—would not be realized.

The survey also investigated the impact of unfavorable future regulations. Respondents indicated that five types of FAA regulations on sUAS commercial operations would be unfavorable for their business. Among them were requirements for pilot licenses and COAs. In fact, 61% of respondents would likely not start or shutter their existing business operations if those unfavorable FAA regulations were in place. In light of this finding, Snow concluded the overall market for sUAS would basically disintegrate if unfavorable regulations come into being. All the positive economic impacts like revenue, job creation, and tax base creation—not to mention the practical benefits of drone business services—would not be realized.

From: http://www.forbes.com/sites/gregorymcneal/2015/01/31/how-will-faa-drone-regulations-impact-small-businesses/

Other Local Wedding Locations: Campbell River, Courtenay, Duncan, Nanaimo, Parksville, Port Alberni, Sidney, Sooke, Tofino, Ucluelet, Victoria BC.
Destination Wedding Locations: Australia, Bahamas, Belize, Carribbean, Costa Rica, Cuba, Hawaii, Maui, Mexico, British Virgin Islands, United States