Urban air operations

Commercial Drones: from Hype to Trust

Thursday, 24 March 2022

Much like other new technologies, drones have experienced a Gartner hype cycle over the past decade or so. But the past couple of years and the industry’s response to the pandemic show one thing very clearly: the hype is gone, and the trust is real. Drones deliver results and will continue to grow as an industry throughout the globe in spite of economic setbacks. On the eve of Amsterdam Drone Week, we want to provide some of the key highlights from the global commercial drone industry.

Stable Global Growth

The industry as a whole will experience relatively stable growth at a compound annual growth rate of 9.4%, reaching US$41.3 billion in revenue by 2026. Within this figure, the leading region of Asia will grow to US$16.5 billion while the biggest country markets (the US and China) will grow at 6.8% and 9.7% CAGR respectively. Perhaps most-interestingly, however, is the growth rate of South America as a region. The South American market will grow at 11.3% CAGR, led by Brazil in absolute terms (currently a US$373 million market) and by Argentina in terms of CAGR (14.3%). This suggest that developing economies will also begin seeing exponential benefits of drone technology. Perhaps not surprisingly, commercial drones are a service-oriented industry. Roughly 78% of global drone-related revenue is generated through services rather than hardware or software. This segment is set to grow at a rate of 9.6% CAGR and reach US$30.7 billion by 2026.

At the industry-vertical level, the use of drones for energy is projected to become a US$6 billion market. Some of the core activities that drones perform in this industry are for example: inspections, mapping & surveying, and localization & tracking. In Construction, drone applications currently have a market value of almost US$3 billion. These drones are mostly used (80% of the time) for mapping and surveying (e.g. aerial planning, inventory management, topographic mapping, 3D reconstruction of sites or ongoing construction projects). Not surprisingly mapping & surveying represents the majority of drone applications in other industries such as Agriculture (59%), Mining, Quarrying and Oil & Gas Extraction (55%), and several other industries.

Money & Rules

Do others outside the industry also see the value in drone technology? The answer is also a resounding yes. As we mentioned in the previous article, last year saw 199 investment deals which amounted to a total investment value of almost US$7 billion. Moreover, 4 new drone companies began trading in stock markets, each currently holding a market cap of over US$600 million at the time of writing. Although their products aren’t expected in the market until 2024 at the earliest, their work is nevertheless bringing more attention to the blossoming drone industry.

Perhaps the most crucial factor for how quickly the industry will grow is regulation. These facilitate and/or enable more crucial types of operations such as BVLOS, flights over people, and flights at night. Recent developments have been both encouraging (such as the final report from the FAA Committee on BVLOS regulation) as well as disappointing (such as EASA’s decision to delay class identification labels).

Our yearly Drone Industry Barometer collects feedback from the industry and for the industry, and we ask drone professionals about the most important driving factor in the industry. The importance of “rule-making authorities” has been consistently rising from 43% in 2019, to 49% in 2020 and most-recently to 53% in 2021. It is rather likely that this number will rise even more in this year’s barometer, which you can expect around May if you receive the Drone Industry Insights newsletter.

Next Steps

As we said at the outset, when it comes to commercial drones, the hype is over, the trust is real. The drone industry has shown both maturity and resilience in the face of the pandemic, and now that economies and markets are opening up again, we will start to see even more activity, including events like the Amsterdam Drone Week. This will foster even more partnerships, investments, products, and ideas that will push the industry forward. On this note, we look forward to seeing you at Amsterdam Drone Week from 29-31 March, and our CEO Kay Wackwitz looks forward to meeting you at his Xpert Theatre presentation on 29 March at 12:30 CET. See you then!


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