UAF sees opportunity in unmanned aircraft systems

FAIRBANKS — Alaska has been on the cutting edge of unmanned aircraft research for years thanks to the University of Alaska Fairbanks. The question now is, as the technology becomes commercially available, can the state monetize its position?

Mike Sfraga, UAF vice chancellor for university advancement, thinks so.

“We see these (unmanned aircraft) systems as part of the university’s, but more importantly, as part of the state’s future,” he said to industry representatives at the Unmanned Aircraft Systems Interest Group Meeting in Fairbanks Sept. 4.

UAF has spent nearly 100 years becoming the world’s leading Arctic research institution, Sfraga said, and that has melded with technology at the school’s Alaska Center for Unmanned Aircraft Systems Integration as the world focuses on opportunities in the Arctic.

“What you have in the north, at least from my perspective, is one hell of a market out there and one heck of a niche to fill,” he said.

Currently, the Federal Aviation Administration is issuing case-by-case Section 333 exemptions for using commercial unmanned aircraft systems, or UAS. 

Nationwide, the FAA has accepted more than 3,000 applications for Section 333 exemptions since they became available in February when the agency issued draft set of regulations for small UAS operations. About 1,300 Section 333 exemptions have been granted, 10 of which are for companies in Alaska, according to the FAA UAS Integration Office.

The exemptions are just for businesses that want to fly, and the number of those businesses will grow after the rule is final; the software, research, manufacturing and other UAS support sectors are already growing.

A report released in 2013 by the Association for Unmanned Vehicle Systems International, still one of the most comprehensive industry forecasts available, projected Alaska to get only a fraction of the UAS industry as it blossoms, despite UAF’s work.

The report predicts UAS will grow into an $82 billion per year industry nationwide by 2025 and support more than 100,000 jobs. If that projection holds for Alaska, it translates to about 140 jobs and $13 million of total economic impact. The Unmanned Vehicle Association further projects the majority of the growth will occur within three years of widespread regulated commercial use of unmanned aircraft.

Marty Rogers, director of the Alaska Center for UAS Integration, or ACUASI, said the UAF research group already has about 20 full-time employees dedicated to the technology in Alaska.

ACUASI is continuously flying research missions, and has been for years with FAA approval through its status as a nonprofit.

The center’s team and aircraft have monitored hotspots in the 2014 Funny River wildfire on the Kenai Peninsula; aided the Russian tanker Renda and the U.S. Coast Guard icebreaker Healy on the famous January 2012 refueling mission to Nome; tracked marine debris from the 2011 Japan earthquake and tsunami off Alaska and the West Coast for the National Oceanic and Atmospheric Administration; and flown numerous marine mammal observation missions for NOAA and private firms working offshore of Alaska.

“If there had been commercial opportunity, it’s very possible a commercial operation would have done this work,” Rogers said.

A study done by the University of Alaska Center for Economic Development for the state Division of Economic Development analyzed the state’s position in the UAS industry.

Alaska has several significant built-in advantages when it comes to attracting UAS businesses.

First on the list are the UAF Unmanned Aircraft Center and the related Pan-Pacific UAS Test Range, one of six FAA-approved places to test UAS in the country. Combined, the two provide reliable access to the state’s vast airspace and experience in the technological and regulatory sides of the industry.

“Unless a state has a focal point for (UAS) activity, you’re actually seeing very limited growth” in the industry, Rogers said.

The state’s geography also provides ample situations in which unmanned systems are preferred for safety reasons over traditional aviation. Further, the prominence of the oil and gas industry on the North Slope and potentially offshore in the Arctic, add to the potential business opportunities for unmanned aircraft, according to the report.

ConocoPhillips and BP were two of the first companies to fly commercial UAS flights with the aid of a support team for surveying offshore lease areas and Slope infrastructure in 2013 and 2014.

Additionally, the industry has the support of the state Legislature — a big deal according to industry experts.

Sen. Peter Micciche, R-Soldotna, and Rep. Shelley Hughes, R-Palmer, co-chair the UAS Legislative Task Force, a committee of public and private interests that serves as a focal point for all things unmanned aircraft in Alaska.

Rep. Steve Thompson, R-Fairbanks, said at the conference he expects legislation to be introduced in the upcoming session to balance the opportunity and concern brought about by the new technology.

“As policymakers, my colleagues and I need to reflect on how to create a regulatory

system that attracts this industry while protecting the public’s concern about privacy issues,” Thompson said.

Emphasizing industry at the state level is significant, as numerous other legislatures are concentrating on bills for limiting the use of UAS in their states to play to some privacy concerns of the public, those in the industry say.

Where Alaska lags, however, is in the realm of incentives to draw new businesses into the state, the Economic Development Division has found.

Alaska is pegged in the Association for Unmanned Vehicle Systems International study to get only a small portion of the commercialized market, particularly when compared to the UAS research that is occurring in the state now, partly because agriculture is forecast as the major industry for UAS demand, and because of the state’s business environment, according to the Economic Development report.

This goes beyond Alaska’s unavoidable logistical challenges.

At 9.4 percent, the state corporate income tax rate is one of the highest in country.

A lack of a corporate tax has helped Arizona and Nevada siphon technology businesses away from the innovation nucleus that is California, the division report states.

Tax incentives to attract UAS businesses in operations, manufacturing or software support are essentially an afterthought right now, considering the state’s multi-billion dollar deficit, Hughes said.

So, Alaska will have to prioritize the mechanisms it already has to draw the growing industry north.

In addition to the ever-important existing UAS knowledge bank in Fairbanks, the university is actively searching for partners to help commercialize its research, much of which applies to the unmanned aircraft industry in some way.

Cathy Cahill, the Alaska Center for UAS Integration deputy director, also once worked in the Office of Intellectual Property and Commercialization at UAF. Cahill said in addition to small grants to help Alaska residents get their research and technology companies started, the Commercialization Office has attorneys to help inventors patent and bring their ideas to market.

Pairing with UAF can be a mutually beneficial relationship, according to Cahill.

“We’re looking for opportunities to expand our research and partners that will help our research stand out and get funded,” she said.

On a broader scale, the research-centric university can provide access to experts in other fields. They might help an entrepreneur solve a problem or present a challenge of their own that becomes a business opportunity for someone partnering with the university.

Cahill described a scenario in which someone with remote sensing technology could put their product to use through a UAF biologist searching for better ways to monitor wildlife and a UAS operator at ACUASI.

On the financial side, the state has small business loan programs that are potentially suited to the UAS industry, Division of Economic Development Manager Ethan Tyler said.

The Alaska Microloan, Rural Development Initiative Fund and Small Business Economic Development programs provide low-interest, government-backed capital for start-ups.

“Some of our loans actually require a bank turn-down,” Tyler said.

Those programs could fit particularly well with an emerging technology industry with an evolving regulatory framework that may make banks wary.

Elwood Brehmer is a reporter for the Alaska Journal of Commerce.