The Future of MRO - Supporting the Coming Drone Fleet

As anyone in aviation is aware, the drone invasion is coming soon. Drones, which are also referred to as unmanned air vehicles (UAV) or unmanned aerial systems (UAS) are beginning to be used by local governments and police forces, commercial/educational/agricultural users and private enthusiasts, among others. Some of these applications areas are new whereas others are replacing the use of manned aircraft for certain tasks. The FAA has not fully allowed the unfettered use of unmanned flying machines yet (the formal regulations are expected to be released by 2015 ­— you need to have special permission from the FAA currently), but it has been mandated to incorporate UAS into the national airspace system (NAS) and is performing testing on how to best do so.

All of this presents new business opportunities to the entire aviation industry. Many of these entities that incorporate UAS’ into their operations will not be ready to support them, thus providing savvy MRO providers with an opportunity to branch out into a new business area.

In order to succeed in life, as in business, it often takes having a vision of where trends are moving and positioning yourself in advance in order to capitalize on them (e.g., Wayne Gretzky skating to where the puck will be). You do not need to be the first, or even the best, to succeed — you just need to try. With that said, let’s take a look at the emerging commercial drone market and how the potential customer base will need assistance in maintaining these assets.

Commercial Opportunities for Drones

With the FAA expected to begin issuing commercial drone permits in the next two years, this gives time for manufacturers, suppliers and aftermarket providers to prepare themselves as the early adopters blaze the trail. According to a Los Angeles Timesarticle in February 2013, the FAA has issued 1,428 drone permits to various entities since 2007. Of these, 327 are still active. Market pundits predict that thousands of drones will fly with a billion-dollar market in the coming decade (once the FAA allows their commercial use). The largest markets include disaster relief (such as providing emergency cellular/telecom services when natural disaster occurs in a localized/regional area), police agencies, film/television/sporting events productions, agriculture/ranching, natural resource exploration, commercial hunting and fishing, industrial and environmental monitoring, and broadcast media and photography services, among dozens of other industries.

As previously mentioned, not all of these entities will have the desire to maintain their drones. It can be expected that a new niche will be created to service them. Since most of these customers are probably not located at an airport, service companies will need to become more flexible in how support is provided.

Is it possible for an aviation repair agency which has highly-trained and certified personnel who handle either commercial business or general aviation aircraft to be able to compete economically with entities which might focus only on supporting UAS? That is the first question to answered before we consider which skill types are needed to the maintenance personnel.

Can the MRO Industry Affordto Ignore the Drone Market?

Perhaps this is the better question to ask. Rather than wonder how to scale down the overhead for a typical smaller to mid-sized MRO in order to compete for a potential contract to maintain a fleet of four or five drones for a local police agency, aviation maintenance firms needs to consider if any existing contracts for manned aircraft previously used to support the police will be eliminated first. Many existing drone customers indicate that these lower-cost aircraft are either replacing manned aircraft or being used in new scenarios. Once this type of customer begins to gain experience in using drones in more situations, it can be expected that a further decrease in manned aircraft applications will occur as lower-cost drones expand their missions. This has already happened in the military (a well-documented use of drones), as well as in commercial satellite imagery replacing aircraft flyovers for certain types of high-quality earth imagery and geospatial information applications. Neither of these market successes was foreseen by a large part of either industry, despite watching the slow emergence of the new innovative companies into each market.

Such a shift in the MRO market will undoubtedly occur over a few years’ time, and will slowly the current aviation industry affect. This will allow MROs which currently handle existing customers who are migrating from manned planes and helicopters to smaller drones to better assess the coming economic impact.

Possible Training Ground for New Mechanics

It can be easily argued that the skills and experience of personnel supporting manned aircraft are ‘not worthy’ of wasting time on some of the smaller drones (many of which might have a wingspan of a few feet). I realize that my premise here is a bit of a stretch in today’s world, but such a point of view would be short sighted for many reasons.

One such reason would address a generational gap and bring new blood into the industry in a small mass migration, the value of which would be far reaching. Bringing in aspiring aircraft maintenance personnel who are savvy in supporting drones (and working with wireless capabilities and electronic data) would provide a new pool of technologically-savvy talent for aviation to draw upon. Aviation needs more talent — the glory days of aerospace have seemingly passed as young people become drawn to other industries. With a decade or two of airline bankruptcies, mergers and brutal economic downturns, aerospace in general is not viewed in the same way as Internet or technology start ups, the software game industry, or even consumer electronics.

MRO firms can more easily train younger personnel who understand UAVs and their modern communications data links, ground interface controllers, mission payloads (be they surveillance gear, high-end digital cameras, various sensors, etc.) and propulsions systems to handle legacy manned aircraft. This will be especially true once newer next-generation aircraft and avionics enter the market, many of which make use of secured communications, Ethernet-based networks, wireless technologies, automated data transfers, cloud computing applications, etc. These interrelated sets of technologies  are very different than many of the legacy capabilities they replace. You will need people who understand the new stuff.

Aviation needs to have more personnel who are grounded in the latest electronics and communications advancements to support the emergence of e-Enabled aircraft (manned or unmanned).

Lessons Learned From Other Industries

In one of the top-selling business books from the 1990s, “The Innovators Dilemma” by Clayton Christenson, the author argues that established companies had difficulties in scaling down to meet the demands of new, smaller markets within their industry due to costs, company culture, complacency and the lack of innovation. This created opportunities for new entrants to the market. These entrants became successful at meeting lower price points with innovative solutions, and many eclipsed (or swallowed) their legacy competitors over time. One of the industries he highlighted was the hard-disk drive industry, where the initial set of established companies made handsome profits selling drives for moderately expensive miniframe computers (from DEC, Wang, Apollo, etc. — remember them?). When the smaller and less-expensive desktop computers emerged from a new set of computer manufacturers (a resurgent IBM, Apple, Compaq, Commodore, etc.), most of the hard drive companies were not interested in supporting this new market niche, since not only were the prices for these smaller computers much less, this would cannibalize sales from their more-profitable existing business. New disk-drive companies emerged to meet the market need, which, over time, overtook most of the existing hard-drive manufacturers. Never ignore emerging market niches.

While comparing small unmanned drones to large commercial aircraft which can carry hundreds of passengers is certainly a big stretch, the lessons of the hard-drive manufacturers should not be discounted fully. Companies that innovate new products and services tend to not only thrive more, but tend to drive the shape of a market (not to mention the pricing).

We are in the midst of an evolutionary change in the aerospace market. This is due to a new class of e-enabled aircraft with expanded data and communications capabilities entering the market, as well as the adoption of greater information technology use in all facets of aviation, and soon-to come emergence of drones. Companies that adjust their capabilities to meet the change have a much better chance of surviving in the coming decade, and employees (and prospective employees) will need to update their skills to be more IT savvy or they will be replaced with non-technophobes.

Get up to date on not only drones, but, more importantly, on the communications mechanisms, software and ground-support equipment. You just may find that drones may have more in common with manned aircraft than initially meets the eye. 

John Pawlicki is CEO and principal of OPM Research. He also works with Virtual Security International (VSI), where he consults to the DOT’s Volpe Center, handling various technology and cyber security projects. He managed and deployed various products over the years, including the launch of CertiPath (with world’s first commercial PKI bridge). Pawlicki has also been part of industry efforts at the ATA and other related groups, and was involved in the effort to define and allow the use of electronic FAA 8130-3 forms. He recently completed his writing of the ‘Aerospace Marketplaces Report’ which analyzed third-party sites that support the trading of aircraft parts. For more information, visit OPMResearch.com.