CEO Makes Pitch For Drones In The Friendly Skies

As FAA readies guidelines, questions remain about how big domestic drone market will become

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An RQ-4 Global Hawk soars through the sky to record intelligence, surveillance and reconnaissance data.

Congress recently cracked the door to an influx of drone aircraft peppering American skies, and U.S. aerospace firms are ready to kick it down.

Congress in February mandated the FAA craft rules to guide domestic drone flights, clearing the way for what industry executives are betting will be a new revolution in American aerospace history. If the agency completes the guidelines, unmanned aircraft could be approved for use by private operators and law-enforcement agencies in a few years.

"I think this age has arrived," Northrop Grumman CEO Wes Bush told an industry and government audience Friday in Washington, saying "the stars have aligned" after years of resistance over privacy, safety and technical issues.

Lawmakers' much-anticipated approval of domestic drone flights could be a "momentous" milestone in American history, Bush added.

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In a message aimed as much at his shareholders than the lunch-hour audience, Bush ticked off a long list of domestic functions that remotely piloted aircraft may one day do.

The Northrop CEO described a day when drones could be employed to patrolling coastlines and rivers, assist with interdicting drug shipments at sea, as well as monitoring railroads and bridges. Bush noted Northrop's Global Hawk unmanned aircraft already has been used to assist those fighting forest fires in the western United States.

Unlike manned aircraft, drones are not limited by crew fatigue or a need to land due to certain weather conditions. That means they can stay up longer and cover a wider area, and they're much less expensive to operate and maintain than manned aircraft, Bush said.

Though the U.S. Air Force appears to be souring on Northrop's Global Hawk—an airplane-sized spy plane that can fly as high as 65,000 feet—Bush said that airframe could one day be "indispensable" for local first responders and law-enforcement agencies.

While Bush's comments signalled Northrop wants to play in the domestic drone market, it remains unclear whether that will make business sense for his firm and other major unmanned aircraft manufacturers.

"We still don't have firm expectations for how large the market will be," Bush told DOTMIL before his speech. During his prepared remarks, Bush said Northrop "thinks there is a market for things that are more routine" than military missions, but added industry is in the early stages of determining just how profitable it might become.

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Teal Group analyst Phillip Finnegan says any market projections right now "would be highly speculative."

"To get to the point where these things are dotting the sky, it will take time to develop some of the technologies that will be needed before the larger unmanned systems like Global Hawk can get clearance," Finnegan says. "For smaller ones, we could see some volume sooner."

That means smaller drone-makers like California-based AeroVironment could rake in the profits long before a defense and aerospace giant like Northrop, Boeing or Lockheed Martin, Finnegan says.

Images on AeroVironment's website show U.S. soldiers launching lightweight, toy-size drones by hand. By contrast, a Global Hawk requires a runway and weighs nearly 15,000 pounds.

"Northrop Grumman has very state-of-the-art systems that were built for military specifications," Finnegan says. "While the civil market will probably eventually get to that point, price and operating costs will be the focus initially."

Major American defense and aerospace firms have during the past decade gobbled up smaller firms to cash in on booming business like the Pentagon's massive purchase of mine-resistant trucks for the Iraq war. But doing so in the small drone market and actually making sizable profits would be tough.

The Teal analysts says small drones are cheap enough that many local law-enforcement agencies and the Department of Homeland Security will immediately be customers once the FAA guidelines are complete.

"But for those kinds of agencies, especially local police departments, it'll be the low-cost systems," Finnegan says.

John T. Bennett covers national security and foreign policy for U.S. News & World Report. You can contact him at JBennett@USNews.com or connect with him on Twitter. 

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