A bird’s-eye view of the drone business

Considerations in commercial Remotely Piloted Aircraft Systems (RPAS)

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Drones have become more than simple devices to take pictures from the sky. For some, they have opened the window on a number of business opportunities, including some life-saving services. Zipline is an example of a company using Remotely Piloted Aircraft Systems (RPAS) to deliver blood for transfusions to remote areas in Rwanda. In addition, drones are being used to identify safety risks in mines, predict traffic flow, forecast disasters, and even transport humans. From package deliveries and logistics to data analysis and content creation, drone-based business opportunities abound.

Agricultural production has drastically increased in recent years, and studies predict that aggregate agricultural consumption will increase by 69% from 2010 to 2050. This increase will be mostly stimulated by population growth from 7 billion to 9 billion by 2050. Agricultural drones are used to help increase crop production and monitor crop growth. Through the use of advanced sensors and digital imaging capabilities, farmers are able to use these drones to help them gather a picture of their crops and use the information to improving crop yields and farm efficiency.

Additionally, the drone can be used to survey the crops for the farmer. Weekly, daily, or even hourly, pictures can show the changes in the crops over time and the farmer can attempt to improve crop management and production.

  • The following are ways in which aerial and ground-based drones are used throughout the crop cycle:
  • Soil and field analysis: drones produce precise 3-D maps for early soil analysis, useful in planning seed planting patterns and to provide data for irrigation and nitrogen-level management after planting.
  • Crop spraying: Distance-measuring equipment, ultrasonic echoing and lasers such as those used in the light-detection and ranging, enables a drone to adjust altitude as the topography and geography vary, and thus avoid collisions. Consequently, drones can scan the ground and spray the correct amount of liquid, modulating distance from the ground and spraying in real time for even coverage.
  • Crop monitoring and irrigation: Images can show the precise development of a crop and reveal production inefficiencies, enabling better crop management and irrigation.

But with all these opportunities come new risks.

Legislation around commercial drones

Drones are increasingly commonplace, fostering new businesses—think of the gig economy and the rise of freelance drone photographers and videographers but also security risks. For example, Chinese smugglers recently used drones to import $80-million-worth of iPhones from Hong Kong.

For those looking to integrate drones into an existing business model or start a new company entirely reliant on RPAS, James Godden, head of Santam Aviation, cautions that familiarity with the law should be step one. “The South African Civil Aviation Authority (SACAA) identifies operational drones as aircraft that have to abide by laws similar to those of manned aircraft. For commercial use especially, there’s strict legislation in place.”

James says that as soon as you use a drone to earn income – even if you’re just selling footage you captured in your private capacity—you need to follow certain laws. Here are some of the main ones:

  • A commercial drone pilot needs to get his or her Remote Pilots Licence as a starting point, followed by an Air Service Licence (from the Department of Transport) and Remote Operators Certificate (from the SACAA)
  • A drone may not be flown within a 10km radius of an airport, airstrip or helipad
  • Drones must be operated in daylight and in clear weather conditions
  • A drone may not be flown by an intoxicated individual
  • A drone may not be flown within a 50m radius of any person, property or public road

Once the legislation side is sorted, drone insurance is the next major consideration.

The ins and outs of commercial drone insurance

In 2017, the most expensive drone cost $300,000 (USD). In an environment rich in risk exposure—from human inexperience to theft to technical failings—the cost of the total loss of a drone can be devastating to a business.

Interestingly, birds often dislike drones and intentionally knock them out of the sky, accounting for 1-2% of claims. In the private sector, inexperienced piloting accounts for 90% of claims, while, in the commercial sector, technical failures catalyse the majority of claims (80%).

James says that insurance for drones is similar to an aircraft insurance policy, with third-party liability highly recommended.

In order to secure commercial drone insurance, business owners first need to decide what kind of cover they require – and how much of it—in line with the market value of their RPAS.

In response to the growing popularity of these RPA’s, Santam Aviation has developed an insurance product that provides the full spectrum of cover for drone owners and operators within the private and commercial space. Santam is one of the few insurers that are willing to insure this niche area of insurance.

“What is important to note, especially for recreational drone operators, is that insurance under our general personal lines offering covers very limited and restricted in-flight cover and would provide for loss of drone aircraft and claims stemming from Public Liability. Umbrella liability and Personal legal liability insurance are excluded,” says James.

The Santam Aviation policy offers full and comprehensive cover on the drone whether operated or not. This includes liability cover and comprehensive third party cover on the limit the client elects to take.

“We currently insure a number of drones on the Santam Agriculture platform under the sections Business All Risks and Householders. Commercial or business policyholders should, however, note that the company will not indemnify the insured against liability in respect of the ownership, hire purchase or leasing of any aircraft as this is regulated by the Civil Regulations Act. It is therefore important that drones used in commercial applications are covered under a separate aviation policy which provides greater security against liability claims as a result of drone activities,” says James.

The following kinds of cover are available:

  • Cover for the physical loss and damage to the RPAS (airframe, payload, launch station and/or GCS) in its operating or routine testing environment.
  • Hull war extension cover: physical loss or damage to RPAS as a consequence of a deliberate/malicious act or act of sabotage.
  • War liability extension cover: third party liability loss or damage as a consequence of a deliberate/malicious act or act of sabotage arising out of the use of the RPAS.

Those requiring cover will need to fill in a detailed questionnaire which asks for the model, make, management system and insured value of the RPAS; its class certificate and intended operating environment (for example, you may be flying it over the sea if you have a fishing business, which increases the risk of a total loss); and the pilot details with questions about the operator’s pilot licence and total flying hours.

Remember, in order to successfully claim:

  • You need to declare whether you’re intending to take the RPAS across the border
  • You need to declare whether you intend to do any hazardous flying – like at night or near power-lines
  • You need to keep a flight log, in accordance with any standard flight operation.

James says that insurance is worth the investment in the commercial sector especially, where drones tend to be more sophisticated and expensive. For businesses, there’s also the option of business interruption insurance, should a drone-dependent company temporarily lose its RPAS, rendering it unable to be fully operational.

Drone enthusiasts should familiarise themselves with the regulations for operating drones in South Africa which were introduced in 2015 by visiting www.safedrone.co.za

For more information, visit Santam.co.za.

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