Snapshot: The Global Market for Unmanned Aerial Vehicles2 August 2011
Unmanned aerial vehicles (UAVs) are widely seen as a critical component of the defence strategies of the future. Although technological advances are broadening their functional capabilities, restrictions on government spending may slow their development and deployment.
Following their successful deployment in combat operations in Iraq and Afghanistan, UAVs are widely seen as the next generation of aerial platforms to be deployed by defence ministries around the world.
These unmanned platforms are used as force multipliers, performing intelligence, surveillance and reconnaissance (ISR) missions, target recognition, damage assessment and electronic warfare.
Defence ministries around the world are investing in them to reduce troop casualties and capital expenditure, and to replace some older, obsolete manned aircraft.
Specifically, mini and VTOL UAVs are affordable and capable of performing ISR missions, and demand for these cost-effective UAVs is becoming increasingly strong in countries with lower spending power.
According to a detailed market study by iCD Research, the global market for UAVs in 2011 is estimated at just over US$7 billion, and is expected to grow at a CAGR of 4.08% to reach in excess of US$10 billion by 2021.
The US to continue to dominate UAV expenditure
Demand for UAVs is expected to be driven by both internal and external security threats, territorial disputes and defence modernization initiatives. Cumulatively, the market for UAVs during the 2011–2021 forecast period is expected to value in excess of US$90 billion.
Significant UAV spenders include countries in the North American and European regions, with the global UAV market likely to be dominated by the US. Europe's share of the global UAV market is projected to increase, largely due to the efforts of various European countries to enhance their UAV capabilities.
The Asia-Pacific region is also expected to invest considerably in UAVs, primarily due to a tense security environment in the region.
Medium-altitude, long-endurance (MALE) UAVs are likely to account for the highest proportion of spending in the global UAV market, largely due to their superior ISR capabilities. The next two most popular UAV categories are expected to be high-altitude, long-endurance (HALE) and tactical UAVs (TUAV).
Demand for advanced-technology UAVs forecast to rise
In order to increase the capabilities of modern UAVs, the global defence industry is investing significantly in research and development, which has led to the development of technologies to enhance the endurance and survivability of UAVs.
Demand for solar-powered UAVs has increased as they offer improved endurance and reduced maintenance costs; solar-powered UAVs are able to remain airborne for longer, making them better suited to providing high-quality surveillance data over wide areas.
Another area of interest for manufacturers is improving overall UAV survivability. Defence equipment manufacturers are looking to develop UAVs capable of operating in high-risk areas such as battlefields, urban canyons or dense forests.
UAVs' roles are also evolving, from deployment on ISR missions to a wide range of capabilities such as electronic attack (EA), strike missions, suppression / destruction of enemy air defences (SEAD/DEAD), network nodes, communications relays, and combat search and rescue (CSAR).
Acquisitions and joint research and development programs to increase
The global economic slowdown has reduced military expenditure worldwide, as a consequence of which a significant number of countries are establishing joint projects in order to share R&D costs.
Partnerships between defence firms have also increased, and countries are investing in the development of their domestic UAV industries by establishing strategic alliances and technology-transfer agreements with global UAV manufacturers.
The global UAV industry is highly fragmented, due to the presence of a large number of established manufacturers and a significant number of small- and medium-scale enterprises. Many of these established firms are, however, expected to acquire smaller UAV manufacturers with niche capabilities in order to enhance their own technological capabilities and broaden their product portfolios.
In 2011, for instance, Selex Galileo, part of Italy-based Finmeccanica, acquired the Unmanned Technology Research Institute (UTRI), an Italian developer of mini UAVs for defence and homeland security use.
Defence budget cuts and high accident rates impede growth of the global UAV industry
Cuts in military expenditure worldwide have led to the cancellation or indefinite delay of various UAV projects, and are having a detrimental impact on the growth of the UAV industry.
For example, in 2010 the US Army indefinitely postponed the upgrade of its Shadow RQ-7B aircraft to the new RQ-7C model in order to reduce costs. The French government may also scrap the Talarion UAV development project to save development costs.
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