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Jun 24, 2016, 01:53 AM
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Will the drone craze be a Boom or a Fizz?

There are many touting that in the future drones will be everywhere, doing... well pretty much everything from delivering our groceries and much needed medicine to people in remote areas to farming, bridge and cell tower inspection and so on, but how much of this will be true?

Well I believe the answer will be dependant on where you live in the world.

Even though I believe there will be uses for drones in Agricultural and inspection here in the US, I don't believe we will see much in the way of delivery for many many years, if ever. The reason is simple. Liability.

Liability is a huge expense to companies and one that is hard to factor in the price of goods and services. As the saying goes, "things just happen"' and successful businesses have workforce policies to reduce liability by reducing another important factor in their day to day operations, Risk.

Risk and risk management is one of the many ways a company tries to reduce the cost incurred by accidents and therefore reducing a chance of monetary liability. Monetary liability to businesses in the US costs billions and therefore Risk management becomes an important part to the bottom line of a business. To offset the cost of monetary liability, individuals and companies rely the insurance policies.
Insurance policies help protect companies and individuals by off setting the cost of monetary losses but depends on whether the amount of coverage in the policy is enough to cover the cost of the liability. This leads to another important factor in business operations, Loss.
Loss in business is when the cost of something is not factored in it's products or services price. For example in a convenience store where theft is rampant, the cost of an item also includes the cost of the potential loss and therefore the products prices will be higher than a regular store. Loss management and Loss Prevention is also part of owning a business.

So what does that have to do with Drones delivery?
Well... everything
For a company to risk a flying a drone over homes, buildings, traffic and people they would have to have a large enough insurance policy to cover the worst case liability otherwise they could incur a massive loss. Most businesses have a 1 to 5 million dollar policy but in this case it would have to be more because of the uncertain risk involved. The reason being the newness of the industry and the perceived dangers that could be involved. When people drive in traffic they know there is an inherent risk and so do tort lawyers, but people do not expect a drone to land on them or their property and that is where things could get very costly. In an automobile accident, both parties are supposed to, by law have an insurance policy and believe it or not defense attorneys often argue that because of the known inherent risks we all take while driving, the victim is partially responsible. Having a drone crash into your picnic harming or killing one of your children.. well that will cost the business much more. Both in monetary liability and perhaps in reputation as well. It would be very hard to argue a case where a drone harmed anyone or anything.

So given the scope of the above one has to ask, “How much would drone delivery cost and would it be cheaper than delivery by vehicle?”

Well this is something I do know about.
I worked as a delivery driver for FedEx ground for a bit. I drove both the over the road trucks and local delivery vans.
Fedex Ground is a company based on “contractors” to handle the delivery. FedEx Ground has NO delivery vans themselves (or at least at the time)
Why? Because of liability and loss. Most people think that FedEX, UPS and USPS make money on delivering mail and packages but the opposite is true. They make their money on people shipping packages. After a package is picked up the loss begins until it's delivered. In many rural areas, all three lose money and in the state of Montana the losses are huge. Delivering packages via drone? no. UPS, FEDEX and USPS are looking at a plan where they drop off residential packages at a central location and have the person drive and pick them up. Each company is just waiting for the other to start.
It costs on average $2.60 a mile to drive an over the road truck depending on fuel costs. In town the costs go up because of accidents and wages for delivery drivers. These figures were for this state. Other states will be lower or higher.
Also with a delivery vehicle there is a system of roads to follow and usually a shoulder to pull off on for the delivery. With a delivery drone there isn't this infrastructure including a place to drop the package off. Fact is there are just too many variables for dropping off the package to make delivery via drone possible. Dogs in back yards. Power lines (some the home owner did to an outbuilding) Patio covers, new constructed structures, fences, over grown trees and so on. Plus there is theft of packages that is a growing concern in the US. Who will insure this possible liability? How will you control the risk or loss? How will you factor that in the price.
Amazon thinks they can but Amazon is not a delivery service and has NO idea what it takes to get the package from their warehouse to your door. This is a marketing scheme for them and nothing more. Many companies have come and gone trying to make it in the delivery business.

Farming is often touted as being the big market for the future of drone manufactures. Because my business relies on farmers and the agricultural business in Montana, I can tell you first hand it will not.
The reason being is that farmers are, well... farmers. They know how to grow crops but to give a farmer a flying drone to check on crops and better yet maintain the equipment is another matter. Farmers “contract” out much of the things they need done they themselves don't know how to do. Whether it's pivots, pumps, veterinarian needs, electrical, crop dusting, harvesting, trucking and so on many will hire it out. Also farmers are used to “warranties” and often will trade in their used stuff for new stuff that has a warranty because it's cheaper than repairing the used equipment and less of a hassle. Don't get me wrong there are some good farmers out there but at least in this state they are getting fewer and fewer as the farm is being passed down from one generation to the next. In short, there are a lot of half assed farmers out there and these farmers expect everything for free or close to it. They don't maintain their equipment and often times will just do half ass repairs to get by. Selling to these home owners with big back yards will lead to a service nightmare for drone manufactures. After the first wave, Farmers will just contract it out like they do most of their technical stuff and by doing so, manufactures will sell few to few contractors than many to farmers.

Once again most governments will once again contract the service out. When drone were first discussed in the media for use by government, the public outcry was huge! So huge that many states and local governments tried to pass laws to stop it. Once again we are talking about a service nightmare for manufactures. I know this because at one time I was the head of R&D for a company that built custom surveillance products for law enforcement throughout the country. I know we all like to think that our local police station is something you see on CIS and in movies but it isn't. The fact is that your local law enforcement may have one or two “techs” but these are not the “techs” you see in the movies. At most, they may know how to use a bait car or view footage on a DVR. I met the ones in Phoenix and.... er.. nice guys but.. yeah not going to work out with a drone. Federal government and state Governments will once again just source it out like they currently do with much of their work. For example, Violia Water is a private company that handles many cities water and sewer. Prison food is also handled by contractors. Private Military contractors do most of the work on bases and so on... With the new laws being passed the other problem is who is going to carry the license to operate the drone? Also US governments like to deal with US company and use US goods. So few are manufactured in the US that I can see this being an issue as well. In most cases, manufactures have to get on a Government vendor list as well. It's going to be hard to do for a Chinese manufacture who's products are usually in the media in a negative way and are not made by Union labor. Federal government already has their preferred vendors for military style drones so if then vendors decide to make multirotors then the rest of government will follow suit. Governments will also expect a long term service contract and for the products to be very very well tested. They will not put up with dubious firmware and hardware issues as with most business here in the US.

Once again “contracted” out because of liability and who is going to hold the license? Businesses will want to hold the license so if an employee leaves they can still operate. Who is liable in an accident? The employee or the business?

Roadway construction and inspection is already contracted out for the most part except for smaller patch jobs so it would make sense to contract out the drone work as well.

Cell phone tower inspection is once again already contracted out. Once again for liability reasons.

All of this contracting will leave manufactures selling less drones than they predict. Also with older retired operators and hobby operators that already own the equipment and that may want to do this on the side, this too will cut into possible sales of commercial drones for smaller jobs.

All of this comes back to my original point. Liability
I don't think that 107 is very clear when it says “ No careless or reckless operations”. This is very ambiguous and as we've seen the FAA has no problem prosecuting under the accusation of “reckless operations”. Businesses can't bank on ambiguity. We had at one time in Montana no speed limits but the law read reckless driving was up to the arresting officer... The average speed in Montana actually went down according to reports. Businesses need guidelines to go by and can't risk being fined from a bureaucrat's interpretation of the meaning “reckless operations”. We need to know exactly what that means and guidelines for what constitutes the definition.

The fines are HUGE for most that will operate these. I think we will be seeing a lot of fines happening in the future. Some could bankrupt the operator.

There is also a matter of insurance. Who is going to insure this kind of business? Is the homeowner or land owner liable if the operator doesn't have insurance as they could be or are with roofers or building contractors?

And last.. The states...
The states may not have the right to govern the NAS but they certainly have a right to govern the land. They will want a piece of the action and they will get it. I'm almost willing to bet that states will figure out a way to make operators pay a fee for taking off and landing within the state as they have with trucking, ATVs, Camping, video rentals, hotel rooms, checking in luggage.... They could do this and some have already used this tactic to stop people from flying in city limits. They also have a right to issue business licenses within the state and could make it costly to obtain one if it's being used to fly drones. Also require a bond and insurance within the state like they do with most contractors.

So in the end how much of a boom can this be? Logically... not much of one..
Last edited by Deserteagle; Jul 19, 2016 at 01:15 AM.
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Aug 25, 2016, 12:13 PM
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For those of us who are not profit motivated, but only wish to use these aircraft for humanitarian or search & rescue purposes (i.e delivering medicine to remote places in developing countries where road access is impossible, searching for survivors or mapping terrain after a natural disaster etc). Do you see this working?
Aug 27, 2016, 09:13 PM
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Originally Posted by droneflyer323 View Post
For those of us who are not profit motivated, but only wish to use these aircraft for humanitarian or search & rescue purposes (i.e delivering medicine to remote places in developing countries where road access is impossible, searching for survivors or mapping terrain after a natural disaster etc). Do you see this working?
I do but I also seeing the government making it hard to do so and here is the reason for it"

Quoted from a post I made on the CBO I started here and based on the recent Forbes Article.

Forbes Article.

What I posted..

"Yeah. As you know I've been warning others for over a year now what is coming down upon the hobby but to no avail. The AMA, DJI,, Amazon, Google, Pilot's union and defense contractors want this hobby to be back into controlled fields and nothing more. I'm only one guy and can only yell so much. People are easily lead down a bad path and it's certainly so with most hobbyists. They seem to be a group that is easily fooled and also seem to be a group that believe the glass is half full.

The names I listed above are spending millions to stop what this hobby is currently doing. Corporations do NOT like the fact that these camera drones can be used to take pictures and videos of certain areas such as waste ponds and what not. Homeland insecurity do not like them either and the same with ATFE.

The fact is nobody is really fighting for hobbyists. AMA is only fighting to be the only qualified CBO to corner the market. DJI is fighting so their version of GEO (that they have applied for a patent) becomes the standard and corners the market. wants to be a pay to fly, air traffic controller for drones. ShAmazon wants us out of the air so they can deliver boxes of junk. Defense contractors want to corner the commercial market. Pilot unions wants to stifle the growth of drones because it threatens their jobs. ATFE sees anything as a threat. Homeland insecurity.... well I'll just leave my impressions of what they truly are to myself.. AMA just wants to sell insurance. NASA also wants to become the air traffic controller for drones.

And last but not least the FAA just wants to do whatever they can to NOT be phased out and replaced by a private "non profit" even though the eventually of that happening is pretty high and why the government is only funding them for short intervals. "

The problem with flying medicine to remote places is this cuts into profits that pilots can make. Also it is BLOS.

Search and rescue has already had run ins with the FAA about using drones. You have to understand the bigger picture and it has everything to do with Quid pro Quo or pay to play. Defense contractors want the search and rescue market.

What it's going to be in the near future for this hobby and using these for commercial purposes.

1. you will have to be licensed
2. you will have to have insurance.
3. your equipment will have to have an annual.
4. you will have to put forth a flight plan
5. you will have to have clearance to fly in an area
6. you will have to maintain flight logs
7. Flying BLOS will be reserved for larger companies only.
8. People will be fined either based on accidents or posting youtube videos showing non compliance.
9. or NASA will be your air traffic controller.
10. If there is already full sized aircraft helping with the search you will be grounded and watched like you are a criminal.

After the fines begin, you will see many not wanting to participate.

Sorry man but everything above was already proposed back in 2008...
Just because you want to do this non profit doesn't mean anything to the power brokers. In fact it's a threat.

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