Monthly Archives: October 2014

The Coming Disruption in UAS

The UAS market is on the cusp of a huge disruption which will see the rise of new innovative firms and almost certainly the demise of some currently established players. The root of this disruption: the opening of civil airspace to unmanned systems.

In the United States Federal Aviation Authority (FAA) plans to have regulations in place for the safe integration of civil UAS into the U.S. National Airspace System by September 30 2015, a date which will mark the opening of a major new market for unmanned systems. Earlier this year Kaman, which produces the K-max unmanned helicopter, said it expects to see unmanned helicopters flying for commercial US customers within 5 years.

TKamax wiki commonshis poses a key question to stakeholders in the UAS community – governments, military and industry – how do they meet the challenge and reap the benefits of a major change in what is currently a stable sector.

The UAS sector is currently dominated by firms that operate in the defence and security sector. Military requirements have driven the development of UAS up to now and there has been a very limited commercial market as civilian airspace restrictions have prevented their use in most civil areas.

The firms at the forefront of UAS development are used to dealing with military requirements and timescales which involve significant engagement with the customer and can be developed over years, if not decades. They are often publically held and while they invest in R&D often have cumbersome structures in place to monitor investment, which can inhibit innovation.

There is also a focus on the big-ticket systems – tactical UAS such as Predator/Reaper, the UK’s Watchkeeper, the future unmanned combat aircraft (UCAV) that is the subject of UK-French co-operation, with billions of dollars and pounds invested in developing the capability.

However, there are a trends in the UAS space which are laying the foundations for change. The first is the increasing commoditisation of platform and components – particularly sensors and power plants. Linked to this is the increasing importance of the software that delivers the capability – whether it is path finding, sensor fusion or data analysis. The real ‘value-add’ in the UAS space right now is not hardware but software and it is the software side that will determine who is successful in the future UAS market.

This is crucial because once the civil airspace market opens up it will trigger an explosion of interest, investment and innovation in commercial UAS. The established players will suddenly be facing competition from a whole new generation of small, agile, software led companies vying for contracts to provide the brains for a new generation of civil UAS platforms.

This sudden increase in competition has the potential to result in a frenzy of rapid innovations and advances in key areas like sense and avoid, autonomy, data and sensor analysis.

These platforms may initially be small or micro-level platforms (glorified remote control vehicles), but the increase in demand that will come from the opening of the skies will inevitably lead to rapid progression in size and capability.

The risk for operators is that their expensive, bespoke military systems may rapidly be equalled or even exceeded by commercially available technology in all but the most expensive and advanced military systems, rendering all that valuable investment obsolete.

Rapid advances in commercial technology may drive down costs for defence UAS, but this also has a flip side. Reduced costs will lead to greater proliferation of UAS systems and technology to state and non-state actors, potentially presenting new threats to be countered in the military domain.

This new world is already starting to build. I recently spoke with Matt Parker, Precision Director of UAS Operations in the US (one of the largest, if not the largest, private sector operator of UAS in the world) who told me that he’s already seeing the emergence of a new type of competitor: small companies springing up trying to leverage off-the-shelf remote controlled aircraft technology with in-house developed or open source autopilots – and their approach is revealing.

“While we’ve been talking to government level customers, the DoD, SOCOM, they’ve been talking to tech investors and getting money to enter the market,” he says.

It may not just be the small tech start-up that disrupt – the lure of a new market will also entice major players from other sectors who may then end up competing in the military UAS as well as civilian markets.

While Parker says that these new entrants operate “at a different level” to Precision, the question he and other UAS manufacturers and operators will need to answer in the near future is: how long until that changes – and are they ready?

By Matthew Smith

The Helitech Top Five

I am writing this on the flight to Amsterdam for this year’s Helitech International, hoping that the 45 minutes flying time will help concentrate the mind, despite the early start this morning.

This is the second year under the event’s new format, which has seen Helitech move from the more romantic setting of Duxford airfield near Cambridge and into the large exhibition halls of Excel last year and now the Amsterdam RAI.

The original decision to move the event from Duxford sparked some heated online debate at the time, with many lamenting the end of what they saw as a great day out and seemingly unable to even consider travelling to London to see the exhibition.

To me, such views were justified in a certain context but also short-sighted – if Helitech was to indeed become the European version of Heli-Expo, the change of emphasis and the move to a central hub were essential.

Helitech

In the interests of full disclosure, I should say here that Shephard publishes the show daily for Helitech, so we obviously have a long-term vested interest in the event being a success.

But I would also argue that Helitech’s fresh focus contributes to a heathier industry, especially when aspects such as the event’s business leaders’ forum are considered, which this year features four key CEOs, who were unlikely to make the trek to Duxford, despite the picturesque surroundings.

So looking forward then, rather than backward, what is in store for visitors to this year’s event? At the danger of forgetting something critical, here are my top five themes of Helitech International 2014.

• New aircraft

Helitech 2

Understandably, the helicopter OEMs manage to attract most of the attention at events like this, and this year will be no exception. AgustaWestland will showcase an AW189 in service with Danish operator Bel Air Aviation, while Airbus Helicopters is bringing an EC145 T2 – a type that recently made its in-service debut.

US manufacturers are also present, with Bell Helicopter looking to press home recent advances into Europe, with sales to some key operators. The company is bringing a Bell 429 that is on the verge of entering service with Wiltshire Air Ambulance, which will be the first to operate the type in the HEMS role in the UK. Bell will also be looking to update prospective customers on the progress of the new 505 and 525 models. Shephard understands a ceremony marking the first flight of the 505 has already been scheduled. MD Helicopters, meanwhile, will feature an MD 500E aircraft from Fuchs Helikopter.

The noticeable exception to this turn-out is Sikorsky, which is looking to take the new S-76D on a world tour to drum up interest in that type, but apparently didn’t deem attendance at the show as essential.

• Financing

Less sexy perhaps but no less important is the issue of helicopter financing and the various specialist leasing companies that have emerged in recent years will be at the show in force.

Since Milestone Aviation Group launched in 2010, it has been joined by Lobo Leasing, LCI, Waypoint Leasing, Macquarie Rotorcraft, Infinity Helicopter Leasing, Amur Helicopter Services and GE Capital, which in 2014 announced it intended to make a $2 billion investment in helicopters.

With competition increasingly fierce, there are indications that the market has reached or possibly even exceeded its saturation point, and we look at this issue in some depth in the second issue of the Helitech show daily.

• Offshore safety

Five major incidents in the North Sea in recent years have cast a shadow over the oil and gas industry, and ongoing safety in the sector will likely be a key theme of this year’s event. The three major operators, Bond, Bristow and CHC, along with US-based Era Helicopters and Petroleum Helicopters, have jointly set up HeliOffshore to address safety issues. I will speak to the new HeliOffshore CEO Grethen Haskins in advance of the show about the aims of the organisation, with the interview appearing in the first issue of the show daily. The issue of safety will also be central to the Helitech Educational Programme held throughout the event, in particular on the final day.

• First-time exhibitors

The question of whether the change of direction for Helitech was a good idea will not be answered on internet forums but by the extent to which it is supported by exhibitors (and visitors) themselves. This year sees more than 55 first-time exhibitors from nine countries, including companies such as Genesys Aerosystems, ITT Enidine and BAE Systems. Their impression of the show will be critical in furthering the international dimension of the event in future.

• US pavilion

Similarly, the event features a US pavilion for the first time, following a partnership with the US Commercial Service (USCS) to jointly promote opportunities for American companies at the event. For many of those involved, this is the first time they have exhibited their products outside of the US and if they walk away happy this will also help provide momentum for the future.

For all this and more, keep an eye on our website, while I will be tweeting updates as they happen from @maxrotor and @shephardnews

Are the new UK RN OPVs a waste?

Today, BAE Systems announced the beginning of the construction of three new 90m-long Offshore Patrol Vessels that will be delivered from 2017 and there has been much praise for going ahead with this acquisition.

Unfortunately it seems to be a big smokescreen as these are being built to serve an industrial purpose not Royal Navy requirements. Although some might see nothing wrong with that as we do need to preserve the UK’s naval shipbuilding capacity and skills, other countries do the same (think France with additional Mistrals and Gowind OPVs).

RS17176_CS044514.01.02_still_sea_defused

Let’s put it like this, the 90m OPV design being used to build the Forth, Medway and Trent is similar to that BAE used to build three ships for Trinidad and Tobago. They did not want the ships and BAE managed to sell all three to the Brazilian Navy at a nice knock-down price of £133million (about £44million each) although second hand were basically new.

So the Royal Navy gets the same three at a cost of £348 million (£116 million each) almost three times the price. Even Trinidad and Tobago were due to pay £155 million for all three!

The Royal Navy already has the relatively new River-class OPVs in service. So why replace them so soon? Yes they are larger and have a better aviation capability, but the answer is due to an industrial policy developed by the last government when it signed the Terms of Business Agreement (ToBA) with BAE Systems in 2009 to guarantee shipbuilding and support work worth £230 million a year.

With the QE carrier work moving on there is a bit of a gap opening up between them and the initiation of work on the Type 26 therefore the MoD decided to fill this with the OPVs. Although not an urgent requirement the RN can always use three more OPVs but these will replace the Rivers, not add to them because the RN does not have enough crew for three more ships.

Could the money have been better spent on something else like a maritime patrol aircraft capability for the RN that the Coalition government stupidly canned in 2010? That would seem like the most pressing requirement that has not really been addressed.

Private Practice

The sudden rapid increase in piracy attacks around the Horn of Africa and the, at first, slow response of the international community has led to the rise of a new form of protection for those shipping owners willing and able to pay.

The huge boom in private maritime security companies (PMSCs) has been startling and in a similar vein to their land-based counterparts the initial period of operations created something of a ‘wild west’ environment.

Somalia End of Piracy

However, as naval patrols have brought the incidence of piracy attacks down around the Horn, the environment has begun to change. Easy contracts have been harder to come by and there has been a shift towards increased professionalism in the PMSC community as they look to access new markets and provide a service benchmarked by quality.

In the latest issue of International Maritime and Port Security, Ian Simpson, general manager of Neptune Maritime Security, points out there has been a move by the community to set out and adopt internationally recognised standards, such as ISO (PAS) 28007, which can be used as a stamp of quality. These new standards are designed to give ship operators and owners the assurance they need when they hire the services of a PMSC.

The new standards will also be a handy selling point as PMSCs look to access new markets. As James Bridger explains in his article, there has been a big increase in the number of piracy incidents in the Gulf of Guinea. Recently there has also been an increased level of organisation to the attacks with pirates being able to pinpoint and target specific ships.

In this respect it would be easy to argue that this would be an ideal market for PMSCs. However, the littoral countries of the Gulf of Guinea prevent private individuals from carrying weapons in their coastal waters. This has altered the role that can be played by PMSCs in the region with advisory and consultancy services more in demand.

Similarly, South East Asia is also becoming a complex environment in which to operate. Low level piracy and theft remain the major issues in the region, although there is the occasional larger act of piracy. However, there are lots of cross cutting jurisdictions and complex political issues for PMSCs to navigate.

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Although there has been a shift in its concentration, piracy remains a real problem globally. As Simpson points out:

‘According to the ICC International Maritime Bureau, there were 116 reported incidents of piracy and armed robbery at sea from January to June in 2014 globally.’

PMSCs have had to adapt to this new environment and not all have survived. There have been several recent announcements of companies going under as they fail to find new contracts or have difficulties being paid by some of the more shady shipping operators. However, it is clear that many of them are adapting to this new environment with gusto.

In the next issue of IMPS, Claire Apthorp will be exploring the environment that PMSCs must now operate in and will be talking to some of the companies about how they are meeting these new challenges.