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Drones Take a Big Step Toward the Mainstream

An Aerovironment drone is launched in Alaska. Image source: Aerovironment.

The FAA released its first operating rules for commercial drones on Tuesday and it could open an $82 billion opportunity for the industry over the next 10 years. Rules create a path for commercial operators to get a license to fly a drone and may create a plethora of new business models.

There's a lot going on in the world of drones outside of hobby drones like the DJI Phantom, which won't be a focus of this new regulations, and it's a step toward a future with far more drones in the sky.

What we learned from the FAA this week

The FAA released a long list of rules in Part 107 of the small unmanned aircraft rules. Here are a few of the key requirements from the full ruling :

  • Must weigh less than 55 lbs.
  • Drones must be within the operator's visual line of sight.
  • Drones can't be flown over people not involved in the drone operation.
  • Daylight only operations.
  • Maximum ground speed of 100 mph and max altitude of 400 feet.
  • A camera may be used on the drone but can't satisfy "see-and-avoid" requirements.

This won't allow Amazon to unleash its drone delivery idea, but it could open up business models for drones in other areas of the industry.

Where we'll see drones first

If you look at where drones are being tested now, you'll see a lot of applications like surveying oil & gas fields or monitoring crops for a farmer. And these are the kind of places where we'll likely see drones first.

Qube is a search and rescue drone for law enforcement. Image source: Aerovironment.

Aerovironment (NASDAQ: AVAV) and Boeing (NYSE: BA) have been testing small drones for gathering data for oil & gas companies and in agriculture as well. With wider approval to allow these flights, which were formerly limited, they could open up a business model to sell these services to new customers. A company called Measure is also testing using drones as a service to gather data for customers for a variety of different uses.

Two more areas that could open up with these new regulations are realtor drone photography and search & rescue. At the least, both will be allowed to operate legally under this framework.

A path to future growth

There's been a lot of hope for drone companies for years, but regulations have held the industry back so far. The latest FAA rules will at least give a path for businesses to start building infrastructure and business models that use drones to accomplish new tasks in industry.

We still don't know what the financial impact might be for drone makers, but the estimate of an $82 billion market in the next decade shows that there's high hopes. And with more regulations that open drones up further to businesses and consumers on the horizon, I think this is a market with a very bright future.

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Travis Hoium owns shares of AeroVironment. The Motley Fool recommends AeroVironment. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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