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Drones and Business: Incorporating UAV Operations into an Existing Business Structure Under the New Part 107 Regulations

By Nathanael Showalter, August 29, 2016

Today, the Federal Aviation Administration’s new set of regulations for the commercial use of Unmanned Aerial Vehicles goes into effect. (For more information on Part 107, please read the Advisory Circular on the ruling, found here) Previous to this rulemaking, sUAS (small unmanned aircraft systems) were shoehorned into the previous FAA regulatory structure for commercial flight operations, which required operators to hold an exemption to the rule requiring their aircraft to be issued an airworthiness certificate (since drone manufacturers do not have a standard of airworthiness to which the FAA can hold the drones), and to have a minimum of a sport pilot’s license. This last requirement had many non-aviators scratching their heads, since there is very little one-to-one application of airplane operation and flight physics to remote UAV operations. But the FAA’s intention in requiring a pilot license was to guarantee that every commercial UAV operator had received the FAA’s standard ground school education on airspace, navigation, and visual flight rules operations.


Now, the FAA is requiring prospective commercial UAV operators to obtain a new license, the Remote Pilot certification. Obtaining this certification still requires time spent in a classroom taking the ground school certification course, and then sitting a newly-created exam for unmanned pilots designed to ensure they have enough of a working knowledge of FAA regulations to safely share the national airspace with manned aircraft. This process has been simplified for UAV operators who already hold a pilot license for manned aircraft; they need only complete an online knowledge test through and submit an application through the Integrated Airman Certificate and/or Rating Application system, or IACRA, with the results sheet attached.


With businesses no longer facing the 333 Exemption application process and needing to hire people with pilot licenses, we can expect to see more companies purchasing drones and integrating them into their workflow. This article will attempt to expose some of the nuances of this process, and offer guidance or suggestions wherever we feel qualified to offer them. A disclaimer: Hover Solutions, LLC, is not a legal entity and cannot offer legal advice. It does not represent or speak for the Federal Aviation Administration or any other governing body.


Drone Classes and Limitations

We will start with a brief overview of the broad “families” of drones that are available on the market. These are: Toys and recreational flying drones; self-builds and ARF (Almost Ready to Fly) kits; professional-grade consumer-level drones (“prosumer” drones); and specialized industrial drones. There is a degree of overlap between these classes. For example, some very small drones may come in a build-it-yourself kit to be used as an educational tool, and their only purpose is to be flown for fun or as a proof-of-concept. Some highly-specialized, industrial-purpose drones may come in a kit to be assembled and customized by the user, as with the DJI Matrice and Spreading Wings lines.


Not all drones are versions of rotorcraft, although the most well-known models are generally quadcopters. Large scaled-down versions of helicopters, powered with liquid fuel or compressed gas, have been used for remote video capture in ways similar to most modern quadcopter drones. The eBee by SenseFly and the E384 by Event 38 are both fixed-wing drones that look like model aircraft. In fact, the line between “model airplane” and “fixed-wing drone” becomes hard to find until one considers the question of intent. Personally, I think a model airplane becomes a drone when it is outfitted with a sensor and/or flown in pursuit of some task other than recreation.


Cost usually climbs according to the sequence in which I named the classes, with toys and smaller drones costing under $100, and purpose-built industrial UAV systems costing anywhere between $10,000 and $100,000 or more. Interestingly, specialization seems to follow a bell curve, with toy drones and industrial drones serving only a single function or carrying a single playload, and prosumer and self-build kits being able to carry a wide variety of sensors and perform a number of different tasks.


The most common type of drone, by a wide margin, is a quadcopter carrying a compact camera. Over a dozen companies make these drones – DJI, Parrot, eHang, Yuneec, and 3D Robotics to name a few – and most offer some sort of first-person, live-streaming view of the camera feed to aid in taking photos and videos. Each uses its own software, flight computer, and stabilization system, and most have a GPS system to assist in navigation. These are the “prosumer” drones, and the most likely ones to be used by small businesses, since they cost between $500 and $5000.


Since Amazon began advertising their “PrimeAir” concept, many people have fixated on drones as a means of delivering payloads. Just recently, Domino’s Pizza has teamed up with Flirtey in New Zealand to offer a limited pizza-delivery service using drones. But in this writer’s opinion, there are too many practical and regulatory problems inherent to payload delivery for this to be a primary use for UAVs in businesses. Rather, drones are much better at carrying and directing sensor payloads, including cameras, thermal imagers, and LiDAR arrays.


Most prosumer drones run on lithium-polymer battery packs, either individually or in tandem. Flight times vary from approximately 10 minutes to nearly an hour for quadcopter drones, although fixed-wing models have reportedly flown over an hour on a single battery charge due to higher lift efficiency. Flight time can be adversely affected by a large number of variables, from atmospheric conditions to payload weight. With current propulsion systems, a drone costing less than $5000 is incapable of carrying a payload weighing more than a couple of pounds, and many can’t carry much more than a few ounces before performance deteriorates beyond acceptable limits. Battery technology continues to improve, so that the average expected flight time for a prosumer quadcopter is now 15-25 minutes, and some may fly as long as 40 minutes.


Some manufacturers reduce costs by using a standard Wi-Fi signal as the control frequency over which their drones and handsets communicate and stream data. However, this also tends to reduce the system’s operational range to inside a mile, even with add-ons that increase signal distance and directionality. DJI uses a two-frequency system called LightBridge which broadcasts control and video uplink data over different frequencies via directional antennae on the RC handset. This increases the potential range of operations to over a mile, but also increases the overall unit price.


Picking the Right Drone for the Job, if Any

Although drones are increasingly popular, there is still sufficient mechanical and regulatory limitation to merit careful thought before adding them to a business structure. Like all machines, drones require regular maintenance, updating, and testing according to manufacturer recommendations. New operators, or operators new to a specific model of drone, will require time to learn and become used to the aerial systems in a controlled environment. Drones require a certain amount of familiarity and mental adjustment, and are not suitable for in-field learning due to a higher risk of personal or property damage. Nearly every operator has “crashed” a drone by accident or had it come out of his or her control, whether by operator error or system fault.


Drones are not always the most practical solution to a problem, either. Many drones come with stabilization features which make them safe for interior work, but these types of drones will often cost hundreds of dollars more than a simple camera gimbal that can be mounted to a stick or rod. Quadcopters also require significantly more skill to operate indoors without GPS assistance, and can cause hundreds of dollars in damage if they collide with walls, ceilings, or people. FAA regulations impose heavy limitations on where drones can be operated for business purposes, prohibiting flight within certain distances of airports, over national parks, or above public roadways and populated spaces.


Nevertheless, there are many jobs that drones can complete faster, better, and more cheaply than anything or anyone else, making them extremely attractive to businesses, and we can offer broad suggestions to companies about what kind of drone they should use based on their need.


Photography and Videography

Easily the largest category on the market, businesses have their pick from small UAVs designed to carry GoPro cameras, to hex- and octocopters that can lift a RED EPIC. Businesses that want to continue to use their own, familiar cameras will very likely need a multirotor system with at least six, if not up to sixteen motors, capable of carrying a gimbal that in turn can be customized to fit the camera in question. A significant number of drones now are being manufactured with proprietary, photography-grade cameras. These include drones by eHang, DJI, and Yuneec, which all have live-streaming telemetry that the operator can use to guide the cameras to take precise shots. The DJI Inspire 1 Pro and Matrice 100 platforms can carry four different types of specialized camera now, interchangeable through their purpose-built data connection port.


Mapping and Surveying

The biggest question in what type of drone to buy in this category is how much land is going to be surveyed at a time. The secondary question is how high of a resolution is required. Fixed-wing drones like the eBee and the E384 would be best for mapping large areas (several hundred acres) since they move much faster than a quadcopter drone, and use their propellers for propulsion rather than as their primary lift-generating surfaces. Fixed-wing drones can cover, in a single flight, what would take even an efficient quadcopter several batteries to complete. The drawback to fixed-wing drones is that they cannot fly below a certain speed without losing lift. This means that their cameras must have fast enough shutters to take crisp photos at speed. Most fixed-wing drone manufacturers will provide suggestions for which cameras to use. Quadcopters are also an option for mapping. Certain third-party applications like Commander allow operators to program a drone with a specific area to cover, then send the drone out to fly until its batteries reach a certain power level, at which point the drone returns to the home location, receives a fresh battery, and resumes the mission at the point where it was interrupted.


3D Imaging and Infrastructure Inspections

Drones which perform inspections and take imaging photos must usually be small, maneuverable under direct control, and carry high-resolutions cameras. Quadcopters are ideal for this, as they can hover and move slowly while pointing their cameras in a number of directions. Some prosumer drones can use standard RGB cameras to accomplish this, and SenseFly has designed the albris multirotor, a drone with multispectral capabilities and sense-and-avoid technology to assist the operator in keeping it clear of obstructions. Flyability has created a drone fully enclosed in a spherical mesh that can enter ducts and pipes. It carries a bank of LEDs and stays upright by means of a gimbal while it takes HD video and photos. Drones that perform 3D imaging of structures will also need the ability to embed photographs with highly-accurate GPS information in order to be compatible with imaging software like Pix4D.


Multispectral Imaging

Must often used for mapping and inspections, multispectral cameras that fit on small, prosumer-grade drones are relatively few. DJI and FLIR teamed up to make a thermal camera compatible with their Inspire 1 line, and Parrot has created the Sequoia multispectral camera to be the size of a GoPro. More complex imaging cameras and sensors are still in development, or only work with much larger, industrial-grade drones at this time. In high demand for geological survey is light RADAR, or LiDAR, which can penetrate vegetation and provide a more-accurate digital terrain model than visual-light spectrum cameras. Even compact flash LiDAR units, however, are prohibitively expensive to small businesses. Agricultural scanning with infrared and near-infrared cameras is very accessible to prosumer drones as small as the DJI Phantom line, since their existing camera sensors can be altered to allow in more infrared light without affecting the camera unit’s shape, mass, or power draw. However, it’s more common to see agricultural scanning cameras on fixed-wing drones because of their ability to cover greater distances, discussed above.


Payload Delivery

Drones certainly exist that can carry weighty objects. However, the Part 107 regulations cap total takeoff weight at 55 pounds for commercial drones (drones carrying greater weight than that will be controlled by a different set of regulations). The larger the object a drone needs to carry, the more propulsion it must have. The more propulsion, the greater the power requirement. The greater the power requirement, the larger the battery. The larger the battery (or other power supply), the greater the weight, and the cycle starts over. Amazon has custom-built a fleet of drone-delivery prototypes which use a VTOL system that transitions into a flying-wing design to cover greater distance more efficiently. Flirtey has created a fleet of drones designed to carry small payloads, but their operational distance is quite limited. A company called Matternet uses drones that share data over cellular networks to perform small-payload operations over great distances in areas like India and South America. It is feasible to deliver packages with drones, but circumstances must exist to make land travel difficult or impossible before drones become the more efficient option.


Creating a Drone Fleet vs. Subcontracting

Business managers all over the nation will be weighing the benefits of integrating drones into their company’s structure against those of contracting out drone work to a specialist. In this section, I will lean on my own experience in building a drone company to try to illuminate some potentially-unconsidered aspects of the experience.


Integrating drones into the company workflow will require both the purchase of drones and the hiring of operators. Purchasing drones, at least, is simple. But the company may need to create a new position or restructure several existing positions to make time for an operator to work. A full-time operator can also act as the record-keeper, maintenance technician, and data manager. This type of operator will need to create and maintain regular maintenance logs, several of which exist in online format (NVDrones and HealthyDrones are both services which track internal flight logs or manual entries to indicate time-based and flight-based service needs). He or she will be responsible for performing regular upgrades, inspections, and tests. The operator will need to determine a drone’s or a part’s airworthiness, and order replacements in sufficient time to prevent work stoppage. He or she may need to perform repairs, replace parts, or evaluate damages to determine whether parts are salvageable or need to be replaced. The operator will need to be licensed for commercial UAV operation under Part 107, which means studying for and passing a written knowledge exam and receiving a certification issued by the FAA. Having a recreational operator’s certificate of the type issued when registering a drone for hobbyist use is not the same thing as having a Remote Pilot certificate. Depending on state and local regulations, the operator may also need a license issued by a local transportation authority (for example, North Carolina’s DOT requires commercial and recreational operators to carry a NCDOT certificate in addition to their FAA license). The operator will need to research every new airspace in which the company requires him or her to fly, and to follow appropriate clearance processes if the airspace requires it. This will likely mean declining work for legal reasons at some point.


By contracting with external operators, businesses can avoid making personnel changes, or assist in the transition as new personnel are trained for operation. Independent contractors can be assumed to already have a system of logging operations and maintenance, and will be responsible for their own fleet. Business managers will want to ask for copies of any contractor’s licensing information from the FAA, which keeps airman information in a public-access database. Managers will also want to check their contractors’ machines for registration numbers, either the new catch-all registration number beginning with “FA,” or the more traditional N-number of the type seen on all aircraft registered in the United States. Civil and criminal penalties can apply to operators who fail to register qualified aircraft.


Companies wishing to incorporate drones into their business structure should not fail to insure their aircraft as business assets. More and more insurance companies are offering coverage for UAVs, but some have caveats on the coverage, mostly to do with compliance to federal regulations. In the past few years, some recreational flyers have filed claims on damaged UAVs, only to have their claims denied because they were flying in restricted airspace without authorization, flying without having registered their drones following the FAA’s registration initiative in early 2016, or flying for business without exemption documentation to section 333 of the FMRA and/or without a pilot’s certificate. When seeking insurance coverage, businesses should be aware that their premiums may be reduced if they can demonstrate that their operators have taken and passed a UAV operation and safety course, formerly offered by a handful of private companies (like DARTDrones), but increasingly common in flight schools and FAA-accredited UAV academies.


Companies looking to hire external contractors for UAV work should simply ask for proof of insurance coverage in the same manner they would any other contractor, and be sure to turn down operators who cannot prove they are covered. As the market swells with operators, companies can afford to be selective about whom they hire, and will be instrumental in ensuring that only UAV companies who behave professionally will thrive. Insured operators are likely to charge more than the uninsured, but the cost is worth the peace of mind.


Finally, companies should be aware of the increased software requirements for working with drones. Obviously, companies which already deal with photo and video media will simply view drones as another means of gathering their materials. But if a construction or survey company were to begin using drones, they may find it difficult to transition from the photographic medium to their surveying software without a go-between. Certainly, drones can take high-quality pictures which can be used in photogrammetry and mapping, but there are only a handful of programs which allow these products to be exported to software like GIS and AutoCAD. Pix4D is a catch-all program which allows a wide variety of exports, and also allows users to manually control data like ground control points (in surveying) and photographic keypoints (in orthomosaics and photogrammetry). DroneDeploy takes the stress off local CPUs by offering cloud processing, but since this is automated, it becomes more difficult to tailor the data to one’s needs. It has also recently added .shp and .dxm exporting options.


Many professional drone companies looking for contracts already own the software they need to sell their product, although I speculate that the majority of startups will focus on visual media like photos and video. Businesses looking to contract with drone companies for industrial uses will obviously want to ensure that their potential contractors own, and are able to use, the appropriate software for the business’s needs. Here is where specialization may force a business to create its own UAV department instead of contracting work out to drone companies: It could be difficult to find a company that has specific knowledge or qualifications to work within a particular field. Many drone companies can create high-quality, eye-catching videos, but not many will be able to work to the specific needs of a survey team without being familiar with geodetic datum planes, contour information, and the software that deals with both.



Although the new Part 107 regulations from the FAA have made it significantly easier for companies to incorporate drones as tools, there are still limitations that must be overcome. Drones must be learned and operated by qualified, certified pilots. They must be maintained according to a safety standard determined by the FAA and by the manufacturer. Companies must choose the right type of drone for the work they want the drone to perform, as well as find a compatible sensor payload and control software. UAVs will need insurance coverage, and their data packages can require specialize software to work with.


Instead of purchasing a fleet of drones and training up operators, companies can consider hiring outside specialists. This can be easy if the company only needs sporadic photography and videography. It becomes more difficult as a company’s needs are more specialized, as seen in surveying, inspections, and multispectral imaging – but some drone companies do offer this specialization (like Hover Solutions, LLC). Companies should carefully vet their contractors, verifying that their pilots are licensed, and their drones are registered and insured. They should make sure the company can deliver them a usable final product. Sometimes the drone company offering the lowest price is not the best option, since keeping up with safety and insurance requirements will increase operational costs.


Hover Solutions is here to offer guidance to companies who want to hire outside pilots, train their own people, or can’t decide between the two. We offer affordable drone services and consultation, especially since we have unveiled a new set of prices for our service packages starting today. Contact us at [email protected] or call us at +1 301-774-1075 with questions, comments, or concerns.