Global UAS Traffic Management (UTM) System Market

Executive Summary

Unmanned Aerial vehicles (UAVs) have proved to be a power tool for several applications across commercial and
non-commercial end-users. Previously, UAVs were limited to mostly defense applications however, in last few
decades technology used in UAVs has improved significantly and their size has reduced. Now the UAVs have
emerged as a cost-effective solution for a wide range of commercial applications such as precision agriculture,
surveying, aerial photography, and mapping, among others. Moreover, the rising prominence of drone as-a-service
has enabled various business opportunities in the commercial sector. Additionally, their ease of usability has also
led to their popularity among hobbyist end-user as well.

The market for Unmanned Aircraft Vehicle (UAVs) has seen a dramatic growth over the past decade. The major
UAV manufacturers and service providers have launched their products after studying the needs of consumers
across commercial and military end-users. Consumer centric innovation in the UAV market is one of the most
prominent factor that has resulted into high demand of UAVs across different end-users. In addition to this, the
exemptions provides by government and regulatory authorities for the operation of commercial UAVs has also
worked as a driving factor in the UAV market. For instance, the U.S. based Federal Aviation Administration (FAA)
and Germany based European Aviation Safety Agency (EASA) are two prominent regulatory authorities that are
actively working towards creating more opportunities for the commercial drone business.

Numerous technological and financial advantages of UAVs over their counterparts is driving the UAV market,
globally. In December, 2016, as per the Federal Aviation Administration’s registration database, the sales of
hobbyist UAVs and commercial UAVs, in the country, was reported to be 2.5 million units in 2016, and it is expected
to rise up to 7.0 million units by 2020. The number has increased significantly from the previous years, and it is
expected to rise rapidly in the upcoming years. The following figure depicts the unit shipment of commercial UAVs
in the U.S. for 2016 and 2020:
Global UAS Traffic Management (UTM) System Market

Figure 1
U.S. Commercial UAVs Market Volume, 2016 – 2020

3,000,000
2,700,000

2,500,000

2,000,000

1,500,000
Units

1,000,000

600,000
500,000

0
2016 2020
Year

Source: FAA Forecast, 2016, BIS Research Analysis

In spite of the strict regulations set by the government institutions, and regulatory authorities about the usage of
UAVs in the commercial space, the UAV manufacturers have successfully sold their products across different
commercial applications such as agriculture, mining, photography, filming, product delivery, and wildlife research,
among others. However, the used cases of UAVs in most parts of the world is majorly limited to the visual line of
sight (VLOS) operation. The governments of different countries are taking appropriate measures to incorporate
UAVs into the airspace for beyond visual line of sight (BVLOS) operation. In the BVLOS operation, several
applications will be catered to. Some of them have been listed below:-

Commercial Applications

 Package Delivery

 Railroad Inspection

 Pipeline Inspection

 Agriculture (Inspection of crop, and soil in large farms)

 Mapping

 Windmill Inspection
Global UAS Traffic Management (UTM) System Market

Government Applications

 Firefighting

 Search and Rescue

 Border Patrol

 Police

 Conservation Management

Governments have imposed several stringent conditions for beyond-visual-line-of-sight operations of drones which
must be followed for the safe and secure incorporation of drones into the airspace. The following figure depicts some
of the major limitations of employing drones in beyond-visual-line-of-sight-operations:

Figure 2
Limitations for Drone in Beyond Visual Line of Sight Operation

Safety- Safety of the public, and the manned airspace

traffic are of critical importance, and one of the major
concerns

Privacy- Privacy concern by public is another major hurdle for

BVLOS operation of drones. People do not want unregulated
drones to be flying over their private property

Regulations- The lack of proper regulatory framework for

BVLOS operation is a major restraining factor

Infrastructure- The proper technological infrastructure

required to support BVLOS operation is still not ready

Contingency Management- The technical capability to safely

neutralize a rogue drone over populated areas is still under
development

Source: Expert Interviews, Secondary Research and BIS Research Analysis

Since the past few years, the companies working in the UAV market have been increasingly focusing on enhancing
the technological capabilities of their respective products for increasing their geographical presence. In order to
securely accommodate manned aviation, VLOS, and BLVOS unmanned aircrafts in the low-altitude airspace, an
efficient approach is required, one which will have arrangements for accommodating diversity, and increasing the
Global UAS Traffic Management (UTM) System Market

demand in the future. The unmanned aircrafts used for the commercial applications are expected to operate at low-
levels (below 500ft.). They will share the airspace with private aviators, infrastructure, and general public. To ensure
the safe and secure operation, unmanned aircraft will have to comply with the current safety standards. Currently,
air traffic management (ATM) is used to manage the traffic of manned aviation in the airspace. However, ATM
cannot be employed for managing the UAS traffic due to the reasons represented by the following figure:
Figure 3
Why ATM Cannot be used for Traffic Management of Drones

The ATM system functions on the basis of voice communication between pilot and base
station. However, drones do not have any on-board pilot and small drones also do not have
any voice recognition feature

The predicted traffic density for drones is way more than the capabilities of air traffic
management system for manned aviation

The unmanned aerial vehicles are very different in terms of performance capabilities as
compared to manned aviation. The ATM systems are not designed to work with varied
performance capabilities

Manned aviation uses radar technology for detection. However, several drones operate
very close to the ground which limits the application of radar technology for detection in
unmanned aviation

Source: Expert Interviews, Secondary Research and BIS Research Analysis

The incapability of ATM to be used for the traffic management of drones has paved the way for the development of
an exclusive traffic management system for drones, known as UAS Traffic Management (UTM) system.

The UTM system is an upcoming phenomenon that is envisioned for managing drone traffic in the lower level of the
airspace. The system is primarily being developed for small drones (i.e. drones with weight up to 55lb) that will fly
500 ft. above the ground level. UTM system is envisaged to be a system of several subsystems which will work
together to provide an end-to-end service. The UTM system will be connected to different data providers to
accumulate the real-time information of weather, airspace traffic, drone registration, and credentials of drone
operators, among others. Although, the UTM system uses different technologies than the ATM system, the basic
key functionalities, and operations in UAS traffic management systems are inspired from the current manned
aviation traffic management system.

The need of UAS traffic management system has been driven by a number of factors such as unprecedented increase
in the number of drones in the airspace, increasing involvement of different governments and emerging regulations,
and collaboration of key stakeholders for the development of a working architecture. However, public security and
safety concern, privacy concerns, and vulnerability to cyber-attacks are some of the major challenges to the
Global UAS Traffic Management (UTM) System Market

adoption of the UAS traffic management systems. On the other hand, the numerous business opportunities for the
stakeholders involved in the development of UAS traffic management systems, and the possibility of these systems
replacing the ATM systems in the near future are expected to create viable opportunities in the UAS traffic
management system market.

Stakeholder Analysis
UAS traffic management (UTM) system is envisioned to be a centralized system that will be a compound system of
several sub-systems, and for the whole system to work seamlessly, each sub-system will be required to function
properly. Every single sub-system will be handled by a different stakeholder. The following figure depicts different
stakeholders, and their roles in the UTM system:

Figure 4
Stakeholders and their Roles in UAS Traffic Management System

UAS Service Supplier Commercial Drone Operators Data Service Providers Law Enforcement Communication Air Navigation Service
System Provider Providers

It is the core of the UAS Commercial drone Data service providers They will become one of Communication system is The air navigation
traffic management system. operators will be one of the supply airspace the end users of UTM required for the tracking of service provider will
It provides command and end-users of UTM system. information, weather system. They will gain the drones, data and instruction work as a regulatory
control of drones, airspace These operators will also data, spatial data, geo access of UTM system to transfer between drones, authority for the UAS
situational awareness and be the most benefitted fencing information and keep a track of the drones operators and UAS service traffic management
manages any contingency stakeholders by the 3D constraint information flying in the airspace that supplier, and also vehicle-to- system market
during the operation emergence of UAS traffic to UAS service supplier comes in the area of their vehicle communication among
management system jurisdiction advanced UAVs and manned
aviation

Source: Expert Interviews, Secondary Research and BIS Research Analysis

The UAS service supplier is the biggest investable opportunity in the UAS traffic management eco system. They will
invest substantial amount in order to set up a robust traffic management system that will safely incorporate drones
in the airspace. In order to generate revenue, the UAS service suppliers will charge two type of fees from UTM
system end-users:-

 One time subscription fee

 Per flight charges

The UAS service suppliers will also have to pay certain amount to the data service providers for accessing the
aviation grade airspace and weather related data.
Global UAS Traffic Management (UTM) System Market

Global UAS Traffic Management System Market, by Region

Governments in different countries are collaborating with the stakeholders to develop an architecture of the UTM
system. For instance, in North America, NASA is working with Airware, Amazon, Analytical Graphics Inc., Gryphon
Sensors, PrecisionHawk, and several other companies to develop a working architecture of the UTM system. They
are aiming to complete their research by 2019. Similarly, in Europe, the European Union is running U-Space program
that will eventually integrate all the drones and manned aviation present in the airspace under single traffic
management system. The first stage of this program is set to be finished in 2019. Furthermore, in the Asia-Pacific
region, Japan is working on the development of the UAS traffic management system, which have been named as
J-UTM. Their study is set to be finished in 2020. Apart from these developments, some of the universities are also
working on the development of the UTM system for their country’s airspace. Nanyang University in Singapore is one
such example. Companies in Asia-Pacific are collaborating with companies from Europe and North America to gain
technical capabilities and stay ahead in the competitive environment of UTM system market. For instance, in 2016,
a leading Japanese drone operator and system integrator, Terra Drone along with Qbic and PMV have invested 5
million euro (~$5.9 million) in an European start-up Unifly. Terra Drone alone provided 80% of the total capital.
The U.S., U.K., Switzerland, Japan, and Singapore are some of the prominent countries in the UAS traffic
management system market.

Based on these developments, it is estimated that a working architecture of the UAS traffic management system
will be ready by 2019-2020 in most parts of the world in the most optimistic scenario. However, after the
architecture is finalized, it will take 1-2 years for the regulations to be in place and for the system to be developed
and become fully operational. Therefore, in the most optimistic scenario, the UAS traffic management system will
be commercially available by 2021 onwards. The following figure depicts three scenarios for the beginning of the
commercial operation of a UAS traffic management system:-