How Profitable Are Drones for the Economy?

Until the early 2010s, drones were primarily associated with military operations by American and Israeli forces. The conversation about commercial drone use began to gain momentum in the first half of this decade. In 2013, journalist Tom O’Donnell wrote enthusiastically in The New Yorker about how drones would soon change our lives.

However, by the mid-2010s, hopes were joined by doubts, mainly concerning two issues: public safety and ethics. In 2014, the New York Police Department warned that terrorists could use drones for attacks. That same year, the film “Droneboning” appeared—a parody adult film where sex scenes were filmed from drones at a distance. The point was not what was filmed, but how: a drone could record two people anywhere—on a beach, in a forest, in an open field, or in a backyard.

The issue of drone owner responsibility has been partially addressed through strict regulations, but the ethical side remains unresolved. In August 2015, a Kentucky resident shot down a drone that was filming his sunbathing daughter in their backyard—he was arrested. In February 2016, a California resident was arrested after his drone crashed into a woman, causing her to lose consciousness.

But amid concerns about safety and ethics, the economic efficiency of drones is often overlooked. Let’s focus on that.

Economic Efficiency of Drones

During the 2015 wildfires in Idaho, authorities hired Empire Unmanned to provide drones for surveying the affected area. This service cost the state’s Department of Lands $1,000 per day—the same as just one hour of a pilot’s work. Another example is aerial photography: for areas of about 50 hectares, planes or satellites are cheaper, but for smaller areas (around 5 hectares), drones are the best choice.

In August 2016, the U.S. Federal Aviation Administration (FAA) allowed limited commercial use of drones. Becky Kramer from The Spokesman noted that these new rules opened the door to a huge industry.

Industry Forecasts and Market Size

Drones are an industry of predictions. There are still too many restrictions, and they are being lifted slowly. As a result, we have yet to see a significant economic impact from drones.

• In 2013, researchers Jenkins & Vasigh estimated that by 2025, the drone industry would create 100,000 jobs and generate $82.1 billion in revenue over 10 years—a view shared by the FAA.
• The Association for Unmanned Vehicle Systems International (AUVSI) predicted in 2014 that by 2019, annual revenue from commercial drones would reach $5 billion.
• Tractica offered a more conservative forecast, expecting the figure to stay below $1 billion by the end of the decade.
• According to Grand View Research, the commercial drone market will reach about $2.2 billion by 2022, with key sectors being agriculture, energy, management, and media.

Revenue and Costs of Using Drones

Costs

William Walsh described the costs in an article for Business Insurance. Traditional ground delivery includes transportation and postal expenses, but air delivery adds more: permits (and the time to obtain them, depending on bureaucracy), the drone itself, area surveys, software for tracking deliveries, and drone insurance. All these factors increase delivery costs.

The main issue is not just money, but time. For example, here’s what you need to do to get a commercial drone permit in the U.S.:

1. Register the drone
2. Submit documents for testing
3. Pay $150 to the testing company
4. Pass the test
5. Wait two days for results
6. Apply for a “Pilot Certificate”
7. Pass a background check

Public Opinion and Market Growth

Public support is important for economic growth, but there are challenges. According to UK-based ComRes, 46% of Britons see drones as an important contribution to the economy. In the U.S., a survey by American Press-GfK found that 43% oppose commercial drone use, including for deliveries, while only 21% support it. A Pew Research Center poll in February 2014 showed that 63% of Americans believe things will get worse if commercial and personal drones are allowed in national airspace.

The drone industry continues to grow. Drones are already used in real estate, and companies like Amazon, 7-Eleven, and Domino’s Pizza have conducted test deliveries. However, these are still isolated cases, and it’s unclear what costs widespread commercial drone use will bring. Ultimately, the only way to find out is to try.