Global spending on UAVs to reach US$5.34 billion by 2017


Global spending on Unmanned Aerial Vehicles (UAVs) and systems is projected to reach US$5.34 billion by 2017, primarily due to increasing defence budgets and growing civil and military demand. Robust demand from developing markets, particularly Asia-Pacific, also augurs well for the market, Global Industry Analysts says.

According to the report, the global market for UAVs witnessed remarkable growth in the recent past, and is expected to sustain the growth during the forthcoming years, primarily owing to the increasing reluctance to risk human lives and proliferation of numerous civil and military operations. At present, constantly changing technological preferences, and special customer requirements are the prime factors driving the market for UAVs. The increasing use of these vehicles in testing operations and their ability to offer real-time intelligence are considered as other factors responsible for rising demand.

Moreover, several countries are seeking to deploy a wide range of UAVs with enhanced capabilities for military as well as civilian applications. The deployment of unmanned aerial vehicles in the battlefield creates a completely new industry, and the usage of UAVs for civil, military, and government purposes, is expected to reach billions of dollars globally during the next decade.

The global Unmanned Aerial Vehicles and Systems market is sensitive to a broad range of factors encompassing technological, political, social, and economic variables. While political factors revolve around regulations, trade/tariff/tax policies, international political relationships, economic factors encompass rate of GDP growth, level of inflation, exchange rate fluctuations, and debt/interest rates. Social factors influencing the market include security issues, such as, rise in cultural terrorism as a result of factors like religious fanaticism, and growing need for homeland defense driven by geopolitical interests to maintain power, among others. Strength of military budgets typically influences profitability of market participants in the unmanned aerial vehicles and systems market for defense applications. Reductions in defense budgets can single-handedly jeopardize competitiveness and survival of market participants as well as sustainability of growth in the industry.

In the upcoming years, plans to purchase advanced combat fighters, enhance ISR (Intelligence, Surveillance and Reconnaissance) capabilities, and modernize network-centric warfare environment will benefit the market. Future growth prospects for unmanned aircraft systems remain encouraging fuelled by favorable government policy actions, as well as UAV acquisitions for defense applications. Demand for unmanned aircraft systems is expected to increase at a positive rate, even though defense spending is expected to remain constricted in post recession years. As countries all over the world face complex security and surveillance challenges, demand for combat aerial vehicles that have the ability to perform wide range of mission-critical operations such as fighter/bomber aircraft, and manned refueling, will increase in coming years. The prospects of UAV for non-military use is also encouraging with increasing use of UAV for myriad applications, such as firefighting, aerial photography, advertising, surveying, and law enforcement. The civil/commercial UAS sector will experience subdued growth in post recession period with most companies pinned down by lack of civil regulations for certification &operation in the national air space. Efforts of European civil aviation authorities and the US Federal Aviation Administration (FAA) to rationalize civil certification procedures will be a key factor for future growth.

As stated by the new market research report on Unmanned Aerial Vehicles (UAV) and Systems, Asia-Pacific represents the fastest growing regional market for UAV and Systems, with annual spending waxing at a CAGR of about 6.3% over the analysis period. Most of the procurement spending will be focused on purchasing equipment for battling emergencies such as terrorist attacks, and natural disasters, undertaking surveillance of airspace and sea, and missile defense programs. In the US, spending on UAVs is fastest for MALE UAV type.

Major players in the marketplace include AAI Corporation, Aeronautics Defense Systems Ltd., AeroVironment, Inc., Alenia Aeronautica S.p.A., Aurora Flight Sciences Corporation, BAE Systems Plc, Bell Helicopters, CybAero AB, European Aeronautic Defence and Space Company EADS NV, Elbit Systems Ltd., General Atomics Aeronautical Systems, Inc., Honeywell Aerospace, Israel Aerospace Industries Ltd., Northrop Grumman Corporation, QinetiQ Group Plc, Raytheon Company, Sagem Défense Sécurité, Science Applications International Corporation (SAIC), Thales SA, The Boeing Company, V-TOL Aerospace Pty Limited, among others.

Earlier this year Strategic Defence Intelligence said the global UAV market, worth an estimated US$7.1 billion this year, is expected to grow by 4% over the next ten years, reaching US$10.5 billion in 2021.

The 4.08% compound annual growth rate for the UAV market will be driven by internal and external security threats, modernisation initiatives and territorial disputes. As a result, the UAV market will be worth US$91.7 billion between now and 2021.

Strategic Defence Intelligence predicts that large growth will come from the Asia-Pacific region, primarily due to a tense security environment there. China, for one, is pushing ahead with the development of indigenous UAVs, as is India.

The United States is the biggest UAV market in the world and will account for 69% of procurement over the next decade, a Teal Group UAV report said when it was released in March. It added that the US will account for 77% of worldwide Research Development Test & Evaluation (RDT&E) spending on UAV technology.
“The UAV market will continue to be strong despite cuts in defence spending,” Philip Finnegan, Teal Group’s director of corporate analysis, said in a statement. “UAVs have proved their value in Iraq and Afghanistan and will be a high priority for militaries in the United States and worldwide.”

The global economic slowdown has reduced military expenditure worldwide, as a consequence of which a significant number of countries are establishing joint projects in order to share R&D costs. Partnerships between defence firms have also increased, as a significant number of countries are investing in the development of their domestic UAV industries by establishing strategic alliances and technology-transfer agreements with global UAV manufacturers, Strategic Defence Intelligence notes. The Dassault Neuron and EADS Talarion are a couple of examples of semi-international UAV projects.

Due to emerging technologies and changing environments, UAV manufacturers are investing in new UAV technologies, particularly stealth. Demand for solar powered UAVs has increased as they offer improved endurance and reduced maintenance costs.