The global drone aircraft industry will nearly triple in sales over the next 10 years, good news for London’s Diamond Aircraft. The local manufacturer is partnering with American military giant Northrop Grumman to make aerial surveillance aircraft here, the first likely to roll off the line by year’s end. “It is a growth area. If they are offering manned systems they are low cost and in demand around the world and there is a growing appeal,” said Phil Finnegan, director of corporate analysis at Fairfax, Va.,-based aerospace and defense consultancy Teal Group. “If they add unmanned, it increases the potential.” In 2013, the global surveillance aircraft industry was valued at about $3.1 billion a year. By 2022 that will grow to $8.1 billion, he said.

It's probably not a deal-breaker for a country like Pakistan if Chinese drones lack the ability to transmit information, or resolution, the way American-made models do. "The Chinese technology will be less advanced," Phil Finnegan, the director of corporate analysis for Teal Group, says. "But it's a big advance over not having the technology at all." Pakistan may actually get a better deal partnering with China to tailor still-developing technology to its desired range for lethal strikes, and custom-fit weapons it already has for drones.

While the FAA is facing criticism for ongoing delays, it is a daunting task that takes time, said Phil Finnegan, director of corporate analysis at The Teal Group, a Fairfax, Virginia-based defense and aerospace market analysis firm. “It’s a difficult issue. The FAA is concerned about safety in the airspace, so they are going to go slowly and maybe err on the side of caution,” Finnegan said. “But they need to be assured that this is a safe process. There are a lot of complexities with the technology, and so they are doing a very thorough job. It’s just not easy.” The most that can be hoped for by September 2015 is a plan that will outline gradual steps toward an open airspace, Finnegan said.

“The problem both CBP and the Coast Guard have is that they both have very tight budgets,” said Phil Finnegan, director of corporate analysis for the Teal Group. He notes that CBP already flies MQ-9s along the border and may not want to “downgrade” its small fleet of unmanned systems. As is, CBP has come under fire from watchdog groups for the cost of its MQ-9 program. The Coast Guard might be a better bet, Finnegan said. The service has sought unmanned capability for years, including a failed attempt at developing its own specialized platform known as the Eagle Eye, and has a standing interest in land-based UAVs. Taking the older Predators from the Air Force may be a cheap option.

Phil Finnegan, director of corporate analysis at the Teal Group, agreed that the control regime could prevent U.S. drone manufacturers from accessing emerging markets.  “There’s definitely a risk of losing market share because of MTCR,” he said. “As this technology spreads worldwide, the U.S. and Israel are not going to be the only exporters. New potential exporters include Turkey and India. China is developing a wide range of UAVs and is beginning to get into the export market.”

Turkey is one of 34 MTCR members. Israel, China and India do not have to abide by the regime’s export rules.  Some change has occurred in the interpretation of the MTCR, allowing U.S. allies to purchase certain systems, Finnegan said. The Australian Navy has purchased the Triton, the U.S. Navy’s maritime version of the Global Hawk for surveillance missions at sea. South Korea is also interested in the Triton, while Japan has indicated a desire to own the U.S. Air Force’s version of the UAV, he said.

“You are also seeing a trend where U.S. companies are being proactive and trying to develop export versions of UAVs that are saleable,” Finnegan said. General Atomics did just that with its Predator XP, an unarmed version of the medium-altitude, long-endurance UAV flown by the U.S. military. The United Arab Emirates was able to procure an XP because it is specifically designed to not carry weapons and its maximum payload is below the 500-kilogram threshold.  General Atomics officials declined to comment for this story.  

“Allies will buy these versions that may not have the capabilities that U.S. forces use but suit their purposes fine,” Finnegan said. “That opens the way for a country like Saudi Arabia to purchase these kinds of high-end UAVs.”