The Future of the Civil and Military UAV Market

Today, Unmanne

Date: Issue 27 - May 2011

Turkey: A major player in the UAV segment?

The speed of development and growth of UAV use has been uneven across global regions with US and Israel still very much leading the way. However, experience of using mature UAV systems on operational deployment has dramatically improved the understanding of the usefulness of UAVs. This is driving a steady growth rate across the military segment.

Parallel to other Major defence actors in the world, Turkey has been interested in UAV systems since the beginning of 1990’s as Turkish Armed Forces(TAF) were searching new measures to apply in their missions against separatist terrorism. In 2004, a two stage UAV policy was adopted by the Defence Industry Executive Committee. As to meet the urgent needs of Turkish Armed Forces, a direct procurement model from foreign suppliers within the cooperation of local firms, has been employed. Ten Heron and three Aerostar aircrafts were acquired within this context. However, the procurement process has been complicated because limited to an altitude of 21,000 feet in tests, instead of the desired 30,000 feet, Herons failed to meet the specifications of the contract. For the second stage, a long term domestic designed R&D project was lunched.

Within these research and development projects, Turkey quickly gained the capability to develop mini UAV’s short after. Turkey has now reached more than mini 160 UAVs which are successfully used in operational basis against terrorism. Moreover, tactical class prototypes are designed. However, the most important step in Turkish domestic UAV project is ANKA, Turkish Indigenous MALE (Medium Altitude Long Endurance) UAV produced by TAI, which is objected to reach superior performance results compared to its rivals. ANKA has a 17 m. wingspan, 155 HP diesel engine with a 24 hours endurance capability and a 200 kg of payload weight. Anka also operates with 2 cameras at 30.000 ft. and can conduct day and night ISR (Intelligence, Surveillance, Reconnaissance) in all weather conditions. TAF has ordered 10 vehicles which are planned to be delivered in late 2012.

Like every other high tech defense system, there are limited players in the MALE UAV market. The speed of development and growth of UAV use has been uneven across global regions with US and Israel still very much leading the way. Experience of using mature UAV systems on operational deployment has dramatically improved the understanding of the usefulness of UAVs. This is driving a steady growth rate across the military segment. However, in the scope of USA’s export policies and EU regulations, there are important restraints in the market for the UAV demanding countries. Thus the operational efficiency and performance results of Anka project, can be a decisive factor which can lead Turkey as a major actor in the UAV segment in the future. Considering its historical ties and unique geopolitical status, there will be great opportunities and drivers for Turkish players in the regional markets especially in Middle East.

Emerging UAV Requirements in Middle East.

Lessons from the past wars in the region, have taught states how Air Superiority underpinned by total situational awareness acts as the ultimate deterrence. This has convinced them that the only way to safeguard national security is to invest in cutting edge air assets. The Middle East resurge in defence spending is a new phenomenon that came with the dramatic growth in economy since 2005, driven by the rise in the oil and gas price.

Key Market Characteristics
For this market insight piece, we have considered the Gulf Cooperation Council (GCC) countries comprising Saudi Arabia, United Arab Emirates (UAE), Qatar, Kuwait, Oman and Bahrain. This is because of the fact that these markets are homogenous and also for the fact that these markets are set to present most opportunities in the regional military air market, at least until 2020.

Up to date, Middle East defence acquisition strategy is influenced and shaped by the members of the ruling royal family in respective countries, and institutional power though growing, still comes second in the most procurement decisions. Political clout of a country of origin influences procurement decision as much as the credibility of a company. This is particularly a dampener for the European companies against the US counterparts; most new air platforms are being procured from the US under Foreign Military Sales (FMS) for geo-political reasons. But at times the governments tend to balance the relationship through sourcing from elsewhere, to Europe and Russia.

The GCC countries are moving towards integration of all platforms including air platforms, air defence and homeland security under the “Peninsular Shield” initiative, though the pace of progress has been slow. The US and European arms regulations (such as ITAR in US, End-user monitoring clauses, etc) often restrain export of sensitive defence technology and skill to the Middle East
The market has total $62.90 billion forecasted revenue projected between 2010 and 2020.
Saudi Arabia is by far the largest military air market studied. Almost a half the total market revenue is expected from this market alone over 2010-2020. UAE is a notable growth market; significant opportunities emerging on all segments of the market, as it continue to rebuild on defence capabilities (increasingly at the centre of UAE military thinking). In Oman the large defence deals are coming through only recently due to recent economic buoyancy. Qatar military air market is also poised to grow robustly, underpinned by dramatic growth on defence budget over the study period.

Unmanned Air Systems in the Middle East.
As part of its technology acquisition strategy, the UAE has invested in development of the AustrianSchiebel rotary Camcopter S-100. The project has been co-ordinated within the UAE ‘UAV Research and Technology Centre’. Schiebel has recently teamed with Boeing in order to market the S-100, which has begun to attract the attention of the German, US and France military. Given the interest in C3I capability that a UAS can deliver, it is expected that the UAE will be keen to acquire a range of platforms with varying capabilities, along with relevant training and support. It is also seeking to advance its own technologies and services in this area through Abu Dhabi Autonomous Systems.
The U.S. State Department has recently approved export version of ISR-only UAS to countries beyond the NATO bloc. That would allow sales in the Middle East and elsewhere to governments previously ineligible to buy the planes. General Atomics see the potential for sales of as many as 100 units in the Middle East and Pakistan of the Predator XP model (ISR only MQ-1), which is already approved for export. In the region, UAE is fronting in developing indigenous version in the Middle East. A few countries such as UAE and Saudi Arabia, among others use tactical UAVs and keen on acquiring MALE UAVs. But the bottom line is UAS are still untapped potential in the Middle East; future procurement would see all round competition between regional and global companies which is an important opportunity for Turkish players.

The Future of the Civil UAV Market:

Over the last decade, UAV manufacturers have moved beyond pure military sales and have shown a significant amount of interest in potential UAV applications in civil and commercial markets. In line with the prevailing trends across the defence sector, the military has acted as a first adopter of UAV systems and has demonstrated their utility, encouraging the idea of their use in a large number of non-military applications ranging from law enforcement and border security to earth observation and communications. It is fairly clear that the market potential on the civil side is considerably larger than the military sector in the long term. This is another key factor UAV suppliers shall concentrate for the future investments.

However, at the moment there are major constraints in the civil market: absence of legislation and regulations for safe flight in integrated airspace; dispersed and highly heterogeneous potential customer base; Both the legislators and industry are striving towards a goal of achieving a capability that would allow UAVs to operate at an Equivalent Level of Safety to manned aircraft. Until this goal is reached UAVs are required to fly either with a special military or an ad-hoc Civil Aviation Authority exemption, or in segregated airspace. At the moment, rules vary from one country to another, an incoherence which makes things more difficult for manufacturers and operators alike.

At some point in the future, eventually UAV’s may eliminate or reduce conventional manned air vehicles. Even if, they don’t entirely substitute, UAV’s may still have the chance of changing the course of aviation history in the next 20-30 years with their developing capabilities and widening area of usage.