Overview
UAS are air vehicles and associated equipment that do not carry a human operator, but instead are remotely piloted or fly autonomously. UAS commonly are referred to as Unmanned Aerial Systems (UAS), Unmanned Aerial Vehicles (UAV), Remotely Piloted Aircraft Systems (RPAS) and drones. A UAS generally consists of 1) an aircraft with no pilot on board, 2) a remote pilot station, 3) a command and control link, and 4) a payload specific to the intended application/operation, which often includes specialized cameras or other sensors that collect data for near term analysis. For example, hyperspectral cameras can be used in precision agriculture applications to determine the relative health of specific crops and to more accurately distribute fertilizer and/or insecticides. In addition to the command and control link, most UAS will have some means of transmitting collected data for analysis.
Market Outlook
The UAS sector is segmented into two platform markets: defense and civil/commercial. Defense UAS include medium-altitude long-endurance (MALE) and high-altitude long-endurance (HALE) systems as well as small, tactical surveillance systems that can be launched by an individual. The vast majority of civil/commercial UAS are small (under 55 lbs/25 kg).
For insight into the domestic and global defense UAS industry and the expanding global market for military UAS, visit the Defense UAS page.
To learn about the civil and commercial UAS market and the current state of the industry, view the Civil/Commercial UAS page.
Defense
Market Analysis
U.S. firms have the largest share of both the domestic and global defense UAS markets and by far the most investment in acquiring new UAS technology. While U.S. firms mostly control the U.S. defense UAS market, these firms’ ability to compete globally and expand their position is curtailed by export regulation. Estimating the size of the present domestic and world defense UAS market is complicated by the fact that many platforms employed by the U.S. are classified and not publicly disclosed. In many cases, foreign governments are opaque and secretive with their technological capabilities. Even so, the Teal Group estimates global procurement of military UAS for FY2020 at $7.94 billion, of which the U.S. accounts for 32 percent. That large U.S. market share is further bolstered by a 70 percent share of world UAS R&D spending for FY2020.[1]
The overall size of the domestic market for large defense UAS is completely subject to the U.S. defense budget. Any industry growth is bound by government expenditure policies that dictate budget allocation. Because products are designed for military applications, defense UAS are not easily adapted to civilian/commercial markets.
Currently, within the domestic market, barriers to entry are high given the R&D and investment requirements for new products, and a highly concentrated industry. This is reinforced by government procurement policies that can make it more difficult to work with start-up companies and new entrants.
While the domestic defense UAS market is limited by budgets, global market demand is growing, and new competitors are emerging, particularly among Middle Eastern governments. There is less concentration of buying power in international markets and no dependence on a monopsonistic buyer. U.S. allies such as the U.K., France, and Germany have largely operated UAS in conjunction with U.S. forces.
Many of the largest U.S. firms in the defense UAS market are the same that dominate the overall aerospace and defense industry, but they also are joined by more specialized firms. Prominent U.S. UAS-focused manufacturers include General Atomics and AeroVironment. These are comparatively small firms when judged against some of the largest defense firms in the world but are still leading market players. Many U.S. systems exported were originally produced in the early 2000s and have improved over the past 20 years by incremental iteration and design upgrades.
U.S. defense prime contractors Northrop Grumman, Boeing, and Lockheed Martin also produce HALE and MALE systems for the U.S Government, as well as small, tactical surveillance systems that can be launched by an individual. Many of these smaller U.S. systems more closely resemble model aircraft than the quadcopters commonly associated with tactical UAS systems.
[1] Steven J. Zaloga, “World Civil Unmanned Aerial Systems: Market Profile & Forecast,” Teal Group, 2019.
Civil/Commercial
Demand for UAS applications in construction, agriculture, insurance, and energy, according to industry stakeholders, may experience tenfold growth over the next five years. Demand for civil UAS applications such as law enforcement, first responders, and governmental survey operations also continues to grow as the technology has developed. U.S. companies have leading positions in UAS analytics, service offerings, and software systems. The market for civil and commercial UAS platforms, however, has become dominated by non-U.S. manufacturers. As a result, predominantly only small-scale, niche manufacturers of UAS continue to operate within the United States. They have yet to develop the manufacturing capacity, customer base, or technological prowess to fully compete with their foreign rivals.
Market Analysis
Technical advancements steadily will lower barriers to use and broaden the applicability of commercial UAS. As civil UAS continues to move up the value chain and create increasingly capable, complex, and sophisticated systems, the overall utility and economic viability of commercial UAS will skyrocket. [2]
Barclays forecasts the global commercial UAS market will grow tenfold in just 5 years, from $4 billion to $40 billion. The Teal Group estimates the civil UAS market is expected to reach over $88 billion over the next ten years. [3] UAS missions will steadily replace more expensive manned operations, which can reduce both total costs and risks posed to pilots. Barclays estimates that the gained efficiency of replacing certain specific manned operations with UAS will result in cost savings of approximately $100 billion. [4]
UAS software, sensors, and processing technology, where U.S. companies have a leading position, also will play a significant role. Automation will allow pilots to control increasingly more UASs at once and artificial intelligence will make analysis of results easier and more efficient. [5]
Potential commercial UAS applications are wide-ranging and markets have arisen in unexpected places, such as local law enforcement. UAS use in construction, insurance, and energy will grow quickly in the coming years, and customers in those industries will soon amass fleets of UASs. While agriculture is currently the largest UAS market, UAS use in this sector will develop more slowly due to the declining profitability and growth of the agricultural industry as a whole. [6]
Product delivery has the potential to become a large market. However, development will begin with narrow uses such as deliveries to remote locations or for high-value and time-sensitive products, like medical supplies, as comprehensive regulation has yet to be established. The civil UAS market is particularly price sensitive because both private firms and local/state government agencies, such as law enforcement, rely on smaller UASs due to their lower cost and extensive utility. [7]
[2] Philip Finnegan, “World Civil Unmanned Aerial Systems: Market Profile & Forecast,” Teal Group, 2018.
[3] Patrick McGee, “How the commercial drone market became big business,” Financial Times, 26 November 2019, https://www.ft.com/content/cbd0d81a-0d40-11ea-bb52-34c8d9dc6d84.
[4] Philip Finnegan, “World Civil Unmanned Aerial Systems: Market Profile & Forecast,” Teal Group, 2018.
[5] Patrick McGee, “How the commercial drone market became big business,” Financial Times, 26 November 2019, https://www.ft.com/content/cbd0d81a-0d40-11ea-bb52-34c8d9dc6d84.
[6] Philip Finnegan, “World Civil Unmanned Aerial Systems: Market Profile & Forecast,” Teal Group, 2018.
[7] Philip Finnegan, “World Civil Unmanned Aerial Systems: Market Profile & Forecast,” Teal Group, 2018.
Policy Points
Given the evolving nature and complexity of UAS operations, the capacity for integrating these operations into systems designed for manned flights is largely constrained by the standards and regulatory structures that manage new entrants into the aviation eco-system. Because of an inherent predisposition to favor manned operations, most government and industry stakeholder efforts have focused on enabling small UAS (UAS with a maximum take-off weight of 55 lbs/25 kg) to enter into operation.
Find information on U.S. and international regulations regarding civil and commercial UAS operations on the Regulations page.
Obtain knowledge on the various export control regimes that affect U.S. exports of defense and civil/commercial UAS on the Export Controls page.
Locate information on U.S. efforts to establish operational and technical standards for UAS on the Standards page.
Learn about the current state of play of trade data for the UAS market and the new Harmonized System codes going into effect in 2022 on the Data Collection page.
Regulations
The United States has taken a lead role in shaping international norms and requirements for UAS operations and for the aircraft themselves. Many governments (such as those in Europe, Australia, Japan, Singapore, China, and Israel) have established their own rules for UAS operations. These rules tend to largely resemble those set by the Federal Aviation Administration (FAA).
Part 107 (published by the FAA in June 2016) established rules for small UAS operations
Notice of Proposed Rulemaking on Remote Identification of Unmanned Aircraft Systems
- Published in December 2019
- Ties remote ID to UAS registration
- Sets rules for identified areas where UAS could be flown without remote ID
- Requires development of design standards to comply with remote ID
- Calls on manufacturers to follow FAA certification processes
The International Civil Aviation Organization (ICAO), the U.N. body that establishes the standards and recommended practices for global aviation, also has provided guidance on UAS.
RPAS Manual
- Published in 2015
- Provides ICAO’s definition of UAS/RPAS
- Sets guidelines for certification, operations, and licensing
UAS Toolkit
Export Controls
U.S. military UAS sales are restricted by export controls that limit to whom U.S. companies may sell their aircraft. These export controls include:
The Missile Technology Control Regime (MTCR)
- A multilateral treaty that inhibits the proliferation of missile technology
- UASs with a range farther than 300km and a payload capacity greater than 500kg are classified in the MTCR as Category I, along with ballistic and cruise missiles
- Category I items are subject to an unconditional strong presumption of denial regardless of the purpose of the export and are licensed for export only on rare occasions.
The International Traffic in Arms Regulation (ITAR) Regime
- Regulates the export of military technologies to foreign nations
- Per ITAR rules, defense articles placed on the U.S. Munitions List (USML) cannot be exported unless authorization is granted by the Department of State
- UAS on the USML can only be exported through an export license or through a Foreign Military Sales (FMS) case in which the U.S. government sells directly to a foreign government
U.S. sales of civil/commercial UAS and components can face restrictions if they are dual-use items (i.e., they have the potential for both military and/or civilian applications).
The Bureau of Industry and Security can assist U.S. companies with determining whether or not an export license may be required.
- 9A012 – Non-military “unmanned aerial vehicles (UAVs)”, unmanned “airships” related equipment and “components”
- 9A120 – Complete UAVs with autonomous flight control/navigation or capability of controlled flight beyond visual line of sight (BVLOS) and/or incorporating an aerosol dispensing system with a greater than 20 liter capacity
- 9A610 – Military UAVs not on the USML
- 9B010 – Equipment “specially designed” for the production of UAVs and associated systems, equipment, and “components”
Standards
The U.S. also leads the development of UAS operational and technical standards, and those standards are largely being accepted.
American National Standards Institute (ANSI)
- Version 1.0 published in December 2018
- Worked with government and industry UAS stakeholders to identify existing technical, operational, and technological standards, assess gaps, and prioritize additional standards and R&D work
- Version 2.0 has been released for comment and will be finalized by the end of June 2020
ASTM International
- ASTM already published the second round this Remote ID standard
- U.S. companies support the ASTM Remote ID standard and have posited that the standard can help the FAA address challenges facing the Remote ID NPRM to facilitate airspace access to as broad a base of operators as possible
- ASTM is drafting a standard for UTM in collaboration with NASA and the FAA that they hope to publish in the near future
Data Collection
Comprehensive data on the UAS market is difficult to obtain because most UAS manufacturers are not publicly traded and few research firms cover the sector extensively; therefore, it is difficult to quantify the overall UAS market.
This issue is further complicated when looking at international trade. There currently is no specific international Harmonized System (HS) code designation for civil UAS. In other words, when commercial UAS are shipped internationally, they have been listed under a broad range of classifications with varying degrees of accuracy. As such, it presently is quite difficult to assemble accurate trade data for UAS.
The World Customs Organization (WCO) approved the creation of a new heading, 88.06, in Chapter 88 of the Harmonized Tariff Schedule to specify UAS and a new Note 1 to Chapter 88 providing a definition of these articles in June 2019. The WCO Secretariat put forth a definition of UAS that hews closely to the International Civil Aviation Organization (ICAO) definition but differentiates them from unpiloted balloons and kites. The definition for 88.02 will also be amended such that “aircraft” will be substituted with “aircraft, except unmanned aircraft of heading 88.06”.
The new codes will be broken down as follows:
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88.06
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Unmanned Aircraft
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8806.10
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Designed for the carriage of passengers
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Other, for remote-controlled flight only
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8806.21
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With maximum take-off weight not more than 250 g
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8806.22
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With maximum take-off weight more than 250 g but not more than 7 kg
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8806.23
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With maximum take-off weight more than 7 kg but not more than 25 kg
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8806.24
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With maximum take-off weight more than 25 kg but not more than 150 kg
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8806.29
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Other
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Other
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8806.91
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With maximum take-off weight not more than 250 g
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8806.92
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With maximum take-off weight more than 250 g but not more than 7 kg
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8806.93
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With maximum take-off weight more than 7 kg but not more than 25 kg
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8806.94
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With maximum take-off weight more than 25 kg but not more than 150 kg
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8806.99
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Other
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This definition and these tariff codes will have official data harmonized at the international level starting in January 2022.
