Study on the economic cost assessment of the planned U-Space regulation of the European drone market
The European Union Aviation Safety Agency (EASA) has published an opinion on the "high-level regulatory framework for the U-Space", in which a regulatory proposal was handed over to the European Commission. This proposal was an important part of the preparations for EU-wide regulation of traffic management systems for unmanned aerial systems (UAS).
In the first opinion, the regulations of UAS and the subsequent refinements of the U-Space proposal, safety in the airspace was the main focus of the regulators. The economic consequences, on the other hand, were neglected.
The aim of this study is to assess the economic consequences and thus contribute to regulation in the sense of the EU Better Regulation Directives. The results of the study will help to weigh the costs and benefits of regulation more carefully.
The study was developed in cooperation with PIVOT Regulatory and describes both the direct costs of the U-Space system as well as the indirect costs resulting from the reaction of consumers and market participants to the new costs and rules for drone flights. It includes a discussion of the possible developments and changes in the drone market in response to regulation. Due to the uncertainty surrounding the final design of the U-Space regulation, several options and scenarios for calculating the economic consequences are considered.
Methodological approach
The qualitative and quantitative analysis was designed with two main objectives:
- (1) the qualitative description of both the direct and potential indirect costs of the proposed regulation; and
- (2) the quantitative estimate of the direct costs resulting from the regulation as currently planned.
The quantitative analysis focuses on three direct cost layers of regulation: software costs (digital infrastructure and drone equipment), infrastructure costs (physical infrastructure for data connections) and customer support costs.
The most important facts in a nutshell:
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Discounted by the average harmonised consumer price index for the EU over the last 10 years (1.36 per cent), we estimate that the U-Space regulation will have a net cost of EUR 7.55 to 8.69 billion by 2030.
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Even if safety concerns are legitimate in the design of U-Space, regulators must not lose sight of the transformative power of UAS. Excluding only so-called "toy drones" weighing less than 250g from U-Space could hinder innovation in and around the industry. It cannot be overstated that the economic impact of costly U-Space regulation would not only affect drone manufacturers, but also drone-based service providers and their commercial customers in industries such as energy supply, construction or agriculture.
In these industries, drone-based services such as inspections or surveys provide valuable services through cost savings and productivity gains. The same is true on a smaller scale for private users or public institutions such as universities and emergency services.