Drones disrupt aviation and infrastructure

28 May 2018

With the number of commercial drones set to quadruple in the US over the next four years, the technology has the potential to transform the aviation sector.

“The drone has been talked about as an innovation that's as significant as the jet engine," says Macquarie Capital Senior Advisor Michael Huerta, who is also a Board Member of Delta Air Lines and former Administrator of the Federal Aviation Administration.

“I'd argue it's even bigger because it's reshaping the cost profile of aviation. We can talk about using a drone in ways you'd never use an airplane, totally expanding aviation and aerospace."

Huerta says companies are investing heavily  in the various applications of drone technology.

According to McKinsey, start-ups have raised more than $US3 billion to explore drone technology.

In 2017, Boeing acquired drone maker Aurora Flight Services. Amazon and UPS have made significant investments to build drone delivery capabilities and Domino's delivered the first pizza by drone in 2016 to a New Zealand couple.

A role in infrastructure asset management

The Macquarie Capital Venture Studio believes drones will benefit many industries including infrastructure, where they can help inspect, protect and secure critical assets, from roads to pipes.

“Drones can reduce operational risk by surveying assets often difficult and sometimes even dangerous for humans to reach, such as train tracks. Inspecting a track manually can be slow, inconvenient and hazardous," says Huerta.

The FAA estimates industrial inspection makes up 28 per cent of all commercial drone missions, the largest application after aerial photography.

“The drone has been talked about as an innovation that's as significant as the jet engine. I'd argue it's even bigger because it's reshaping the cost profile of aviation.”

As drones make asset inspection cheaper, faster and safer, utilities and other large asset operators are likely to play a key role in the development of the technology.

The FAA forecasts the number of commercial drones in the US will more than quadruple in the next four years, from 110,606 in 2017 to 451,800 by 2022.


Addressing public perceptions

According to McKinsey, public acceptance is the most vital factor that will influence the future of drone technology.

“Society forms their opinions around technologies quite quickly," Huerta says, noting some of the privacy concerns that have been associated with drones.

According to Bloomberg, there were 4.5 million drones in active use around the world in 2015, compared with about 320,000 planes.

While the majority of drone users are well intentioned, such as real estate agents, news organisations and photographers seeking an aerial view, the absence of a simple identification process for drones could slow the technology's progress.

“Regulators don't sit in a windowless room," Huerta says. “They respond to societal pressure. So we'll need to wait and see how people react to ongoing developments."

Companies that refine their products, educate the population about the benefits of drones to society as a public health service and public safety service, and establish responsible data policies, are more likely to succeed.

Michael Huerta has played a significant role in shaping American infrastructure. After serving as the Commissioner of New York City's Department of Ports and the Executive Director of the Port of San Francisco in the 80s and 90s, he held senior positions in the US Department of Transportation under President Clinton. In 2002, he helped prepare Salt Lake City's transportation facilities for the Winter Olympics.

Most recently, he served a five-year term as the Administrator of the Federal Aviation Administration under President Obama, responsible for the safety and efficiency of the largest aerospace system in the world. He is a member of the Board of Directors of Delta Air Lines and is a Senior Advisor at Macquarie Capital, bringing his deep operational experience and industry relationships to the firm.