Investing in an Organization's Drone Fleet

April 17, 2017

LMI Staff

Drones are no longer a tool only for the military or a gadget for the hobbyist. It is likely that a wide-range of organizations could soon have a drone fleet, similar to how they might now have a vehicle fleet. Drones can become a central part of operations, acting as a catalyst for new revenue sources or cost savings. 

  • Amazon is experimenting with package delivery by drones in England, particularly in areas with low population density, where the risk from a crash is lower and the costs of human-centered delivery are higher.[1]
  • The U.S. Postal Service is evaluating drone mail delivery in rural areas.[2]
  • Facebook has been working for years on a plan to provide Wi-Fi via blimp over large areas.[3]
  • Cities are evaluating drones to assist with service delivery in the areas of law enforcement, firefighting, property inspections, parking monitoring, and reviewing work done by contractors, such as landscaping.[4]

Many tasks that require a lot of driving and a quick review could be done more cost effectively by drone. Jobs that tend to be more dull or dangerous could be fulfilled by a drone with an employee evaluating video remotely.

But how does an organization or municipality effectively evaluate the benefits and risks of drone use?

Keeping Track of Rapidly Changing Drone Legislation

As drone technology quickly spreads from the military market to commercial markets, it’s essential to know the basics when it comes to owning, operating, and flying a drone. First, it’s necessary to know the laws regarding drone use. Laws related to drones or unmanned aerial vehicles continue to evolve on the national, state, and municipal level. The biggest recent change has been FAA’s introduction of the Part 107 rule on August 29, 2016. This clarified many commercial usages of drones and made it easier to incorporate drone use in paid services.

Drones are categorized by size. Tiny drones weighing under 55 grams or 1.9 ounces do not require a permit to fly. Drones weighing 55 grams to 55 pounds are the focus of most commercial and municipal usages. These types of drones

  • can be carried and launched by a single person;
  • can carry a camera and sensor payload useful for photography, surveillance, mapping, and search missions;  
  • are not so large that crashing into a building will cause catastrophic damage;
  • are capable of package delivery, since most packages are under 5 pounds;
  • are mostly quadcopters; and
  • can still kill or maim a person—caution is key.

In 2012, Congress passed a law which made it legal to fly drones that weigh under 55 pounds as long as the pilots:

  • did not fly the drone for commercial use,
  • flew in an open area, observing community standards,
  • avoided flying above people,
  • avoided manned aircraft,
  • flew further than five miles from an airport or obtained permission to fly within 5 miles of an airport, and
  • maintained visual sight of the aircraft.[5]

In pursuit of public safety, the FAA also requires drone operators to register and tape a copy of the registration to the drone’s battery compartment.

In order to fly a drone outside of these requirements – such as at night, or for commercial use, registered pilots can apply separately for a waiver, provided under Section 336 of the same Act. The result has been more than 5,000 waivers from September 2014 to September 2016.

The introduction of Section 107 allows adults to become licensed drone pilots if they pass an aeronautical knowledge test (“Airman Certification for Unmanned Aircraft Systems”) at a commercial testing center. The applicant registers online with the Federal Aviation Administration (FAA) Airman Certificate and/or Rating Application (known as IACRA) to receive a remote pilot certificate and electronically submit the application to the FAA’s Airman Registry. The FAA sends the application to the Transportation Security Administration TSA for a security background check. Current licensed (manned aircraft) pilots need only pass the knowledge test, which they can take online.

Once pilots are registered, they can use the drone without registering its usage every time. There are additional considerations in Section 107:

  • The flight needs to be done during daylight or twilight if the drone has lights.
  • The drone can fly over people if the people on the ground are participants, such as filming a movie production or in a wedding.
  • The drone can fly up to 100 mph and a maximum of 400 feet above the ground.

What to Consider Before Investing in Drones for Your Organization

While Section 107 simplifies the process of running a drone fleet, there are still many considerations:

  • How could drones simplify your operations or expand the business?
  • What legal hoops need to be cleared first? (For instance, extra insurance is required.)
  • How does one create buy-in with customers or citizens?
  • What happens if we set up a drone program and the law changes?
  • Which firms have experience setting up drone programs?
  • What happens if a drone has engine failure and drops out of the sky, causing damage or harm?

The decision to use drones in business operations should be deliberated seriously. There are benefits to drones that make them worth evaluating. The availability of safety measures will increase in the years to come. Parachutes or cages around propellers are being used to reduce damage on a crash, and may become standardized or even required. 

Incorporating the use of drones in revitalizing the economies of specific regions or locations is also a consideration. LMI has worked with the Commonwealth of Virginia to evaluate how the drone economy could help revitalize areas of Virginia impacted by the decline in the markets for tobacco and coal.[6] Virginia has already invested in developing a technology corridor in south central Virginia near Danville, including a flight range and instrumented airport. Testing of drone business models in less-dense areas such as these can attract new investment and retain technically-savvy community members. Building a tech ecosystem would have rippling economic effects for the region.

[1] Matt McFarland. “Amazon Makes Its First Drone Delivery in the U.K.” CNN Tech. December 14, 2016.

[2] United States Postal Service Office of the Inspector General. “Do Americans Want Drone Delivery?” October 17, 2016.

[3] Jessi Hempel. “Inside Facebook’s Ambitious Plan to Connect the Whole World.” Wired. January 19, 2016.

[4] National League of Cities. “Cities and Drones: What Cities Need to Know about Unmanned Aerial Vehicles (UAVs)” 2016.

[5] Section 336 of the 2012 FAA Re-Authorization Act.

[6] Virginia Unmanned Systems.


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