On March 24, the FAA released a twenty-year aerospace forecast. This is an encompassing 91-page document that ranges from forecasting domestic and international markets for U.S. airlines to commercial aircraft fleet operations. This article summarizes the FAA forecasts for the sUAS industry and includes additional data that will impact the market. The FAA data herein can be found in the FAA Forecast Report: Fiscal Years 2016-2036.
Starting December 14, 2015, the FAA required all UAS units weighing between 0.55 pounds and 55 pounds to be registered. As of mid March 2016, over 408,000 drones had been registered. Data from these registration forms, combined with other indicators, form the basis of the FAA forecast for UAS markets.
Source: 3DR website
Per the charts below, the FAA predicts total sUAS sales will increase from 2.5 million units sold in 2016 to 7 million by 2020. The forecast is further broken down into two categories: model aircraft (recreational) and non-model aircraft (commercial). Aircraft sales in the model segment are estimated to grow from 1.9 million to 4.3 million over the projected four-year period. Total unit sales of non-model aircraft are predicted to be far less than model aircraft, growing from 0.6 million to 2.7 million, but the growth rate of this commercial segment is actually much faster than the recreational model aircraft segment. Between 2016 and 2020, the model aircraft segment is estimated to grow 2.3 times 2016 sales, while the non-model segment may increase 4.5 times.
Sales Forecast Summary in Million sUAS Units
Commercial small UAS
The FAA has contracted with the Teal Group Corporation to assist in forecasting commercial sUAS unit sales once regulations have been put in place. The commercial industry is divided into two categories: higher-end and lower-end units. Higher-end units were assigned an average price of $40,000 and lower-end aircraft had an average price of $2500. What is particularly interesting about the charts below is the contrast between the high-end and low-end units.
The first graph shows lower-end commercial aircraft are forecast to sell at ten times the yearly rate of higher cost units. However, from a dollar prospective, the higher cost units generate significantly more revenue than the lower valued aircraft — $4.3 billion versus $2.7 billion over 4 years (second chart).
sUAS Unit Sales by Year by Category
sUAV Dollar Sales ($million) by Year by Category
Based on forecasted total fleet unit sales in the above chart, the FAA believes the five top industries for sUAVs will be: industrial inspections, real estate/aerial photography, agriculture, insurance and government. These are pretty broad categories, but it's difficult to further refine the data. As the FAA report states: “The number of small UAS forecasted is highly uncertain and is dependent on the regulatory structure ultimately adopted.”
The FAA is exploring how UAVs can safely be used beyond the pilot’s line of sight in both populated and rural areas. Once regulations are formalized, market forecasts could easily grow much higher.
Industry investment indicators
Investments will also dramatically effect market growth. According to Lora Kolodny of Dow Jones VentureWire, industry startups received $855.3 million of funding during 2015. This compares to $94.4 million in 2014. The biggest single recipient of these funds was Chinese manufacturer DJI. They raised $575 million in two rounds of venture funding. The chart below, from Dow Jones VentureSource, illustrates how UAV investments have dramatically increased.
As the FAA states, it is currently difficult to make accurate market projections, but what does seem to be trending is the possibility that the commercial sUAS market may surpass the recreational market in terms of revenue generated once regulations are finalized. By anybody’s assessment, the runway for UAV growth is getting shorter. The conflation of technology in the form of autonomous and object avoidance flight, coupled with large amounts of investment capital, will fuel exponential growth.