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Economic Opportunity in the Sky

Whether it's drones or flying cars, aerial innovation is happening. Governments need to think about regulation and strategy.

Drone Delivery Disaster Aid
Dr. Tim Amukele, with Johns Hopkins, watches a drone aircraft.
(AP/Mel Evans)
From commercial drones to the development of "flying cars" -- electrically powered vertical takeoff and landing vehicles -- we're experiencing a rapid transformation of the low-altitude aviation industry. Aerial innovation has implications for sectors that include not only aerospace and civil aviation but also construction, e-commerce, traditional ground transportation operations and regional planning. With household names like Boeing and Uber venturing into increasingly localized aviation operations, cities and states should be looking at their own regulations, policies and strategic positions with regard to these new technologies.

Implementation of these technologies is accelerating quickly and, as is typical in the age of advanced transportation technology, has already outpaced the policymaking that governs it. And while significant work remains to be done in achieving true integration of drones into the national airspace, industry governance has improved significantly over the last few years. Drone policy, for example, has evolved rapidly since 2015 and stands to progress significantly in the next one to three years as programs like the Federal Aviation Administration's Unmanned Aircraft System Integration Pilot Program (IPP) provide new opportunities for experimental-use applications and new partnerships within the aerial innovation industry.

These uses range from plane inspections at airports to medical-supplies delivery and mosquito-population monitoring. Key features of the IPP include the integration of public-private partnerships and the designation of state, local and tribal governments as the leaders of these programs. This indicates a shift in openness toward increased local participation and control over the regulation and implementation of lower-altitude airspace operations.

For the most part, however, airspace is federally regulated. So why would states and local governments invest in aerial mobility and aviation innovation? One answer is jobs. That was a strong source of motivation for the 149 governmental organizations that applied to be part of the first 10 IPP project slots. And there is the enticing possibility of direct federal investment, such as the $3 million grant to Cape May County, N.J., by the Commerce Department, announced just last week, to help build a multi-tenant building at the county airport for the unmanned-aviation industry, which is expected to bring 130 jobs and $1.9 million in private investment.

The value of the commercial drone industry rose from $40 million in 2012 to $1 billion in 2017, and is expected to exceed $30 billion by 2026, by conservative estimates. The average drone pilot makes $35 an hour, and specialist pilots can earn up to $100 an hour. There has been over $200 million invested in urban air mobility, with the promise of future services like low-noise, low-emissions air taxiing and ambulatory medical services. These jobs touch public and private organizations alike.

And non-federal governments are catching on. In 2017, Los Angeles approved a drone pilot training program funded at a local community college by the local workforce development board, while the University of Louisiana at Monroe is among higher-education institutions developing drone-management programs for four-year degree students.

Ohio recently made aggressive moves toward integrating drones into the Dayton-Springfield airport, in collaboration with local universities. A primary objective is the economic opportunity the state sees, especially as a historic manufacturing center for the aviation and automotive industries, whose manufacturing lines are being increasingly blended.

And a Massachusetts-based company that is developing its own flying car, Terrafugia, recently signed a deal with the Nashua, N.H., airport to start building and testing its vehicles on site. The company gets the benefit of having industrial research and development and operations in the same place where it is testing, along with the opportunity to learn from its airport landlord.

All three examples illustrate the power of government to positively influence their regions' strategic positioning within this burgeoning field, through workforce development, industrial-base revitalization and the activation of local aviation assets. Additional benefits for these early entrants will be new sources of revenue, spin-off innovation industries and increased control over the implementation of these technologies inside cities.

At its core, aerial innovation provides a unique economic opportunity for cities in an age of agglomeration, innovation networks and decentralized production, wherein place-based economic- and business-development opportunities are increasingly difficult to realize without substantial tax-incentive packages. Moreover, cities can use their unique bargaining power to protect their citizens from potential risks posed by drones, including strategies like community engagement, clear policies and designated testing areas.

Partnerships across multiple levels of governments, researchers, private industry and, most importantly, the public, will allow this industry to thrive. It's a great opportunity for cities and states to participate in the largest boom in aviation technology since the 1950s while guiding its implementation.

An urban aviation innovation consultant for WSP USA
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