The U.S. civil drone industry lags behind its counterparts in Europe and elsewhere, but the perception that most of the business is grounded until the FAA publishes the final rule for small-unmanned aircraft systems (sUAS) is an exaggeration.

Business continues for U.S.-based drone manufacturers and their suppliers with an established base of military and government customers. Yet, for small drone companies, which are banking on civil customers to buy drones or drone service, the wait for regulatory approval is adversely affecting their business, forcing them to look outside the U.S. for trade.

“I can definitely say that it (the FAA’s pending rule) is holding back our business,” said Chris Miser, owner of Aurora, Colorado-based Falcon Unmanned. “Most company lawyers aren’t willing to touch anything that isn’t legal. We have also lost business because people are fearful about getting into a business” that is unregulated.

Most of Falcon’s business in 2014 came South America and Africa, where the company’s fixed and rotary-wing UAS have been used for anti-poaching aerial surveillance.

Falcon’s two UAS products are focused on the civil and public safety sectors. The systems include a multi-rotor, the Falcon Hover, and the fixed-wing Falcon. Both are multi-mission, inter-operable systems, which can be used for surveillance, aerial mapping and search and rescue.

The wait for a final rule continues. But there is one avenue available for makers, users and service providers of UAS. Several makers and operators have petitioned the FAA for Exemption to operate commercially under Section 333, which allows unmanned aircraft to operate at or below 200 feet and within line-of-sight. The UAS must weigh less than 55 pounds and operate only under daytime Visual Flight Rules (VFR).

In February 2015, FAA granted eight more Section 333 exemptions. As of early May, it had received over 1,000 requests for exemptions. Of those the Administration granted 248. Among those companies receiving exemptions are: Shotover Camera Systems LP; Helinet Aviation Services, LLC; and Alan D. Purwin for film and television production.

In April, the FAA granted Amazon permission to test drones for deliveries and for research. Google X, the search engine’s advanced research lab, is testing a series of drones to deliver goods, including a flying wing UAS. As of this writing, Google did not have a Section 333 certificate for the flying wing, but does for its Solara 50.

AeroVironment, Inc., which primarily supplies drones for the military and government agencies, is one company that took advantage of Section 333 exemptions before the pending rule was released.

In June 2014, AeroVironment Puma UAS began providing geo-analytic services for BP’s Prudhoe Bay oil operation. “AeroVironment's successful operations in Alaska led to significant increase in the FAA authorized airspace for our commercial UAS flight operations,” said CEO Timothy E. Conver. “As a result, we are now responding to multiple requests for proposal from new customers for our services in Alaska.”

Conver added that the company expects to expand further within and beyond Alaska for the energy sector, and is also evaluating broad and high value applications in agriculture, he said.

Companies with exemptions “are being allowed to learn and deploy and gain experience with this technology,” said Steven Gitlin, AeroVironment vice president marketing strategy, communications and investor relations. As a beneficiary of a Section 333 exemption, “we are in a similar position. We can now go out and demonstrate our systems.”

AeroVironment posted 2014 revenues of $250 million approximately, of which 87% of sales came from its UAS business. The civil side remains small.

The pending rule has had “very little effect” on Boeing Insitu’s business, said Paul McDuffee, vice president of government relations and strategy. “We are at the outer edges of what the NPRM will permit,” said McDuffee. “Our products real ability is well beyond line-of-sight,” he added. “Could we fly under the Part 107 as proposed? Yes. But it doesn’t make good business sense.”

McDuffee said some FAA officials describe Insitu’s drones as “tweeners” because the ScanEagle and larger Integrator are between small and large unmanned systems. Insitu describes itself as a UAS service provider and has yet to develop a long-term strategic plan for the broad commercial market, said McDuffee.

Nevertheless, Insitu’s products have found a home in Australia, where the Civil Aviation Safety Authority (CASA) allows UAS commercial operations under (CASA 101R) rule.

“The are specific limitations to the regulations, but it does give us an advantage to go out and start doing commercial missions now,” said Andrew Duggan, managing director of Insitu Pacific. The oil and gas industry in Australia, which needs aerial surveys of large swaths of land for the laying of pipelines, is for now the target market for the long-range ScanEagle, he added.

But for makers and operators of small UASs, the picture isn’t as rosy. The longer the FAA delays in publishing the final rule, the greater the impact on producers, operators and service providers of sUAS.

“Except for the exemptions, which the FAA is trying to accelerate, we can’t fly commercially,” said Brian Wynne, president and CEO of the Association for Unmanned Vehicle Systems International (AUVSI). “We are really dependent on getting this rule finalized.”

In its comments to FAA, AUVSI’s favors the adoption of a “risk-based, technology-neutral approach” in the final rule. Further, the association advocates for broadening the regulations to include beyond-line-of-sight operations to allow farmers to use UAS to cover large fields. The group also urges the FAA to allow nighttime operations to aid in disaster relief and search and rescue operations.

“Allowing beyond-line-sight and nighttime operations would open up a whole new world for this technology,” said Wynne.

The FAA estimates it could take up to 18 months from the comment period to release a final rule. When Wynne asked FAA Administrator Michael P. Huerta what the association could do to accelerate the regulatory process, Huerta quipped, “Don’t comment,” Wynne recalled. As of late April, the FAA had received 4,500 comments on the proposed rule.

Safety and training experts recommend that UAS operators obtain a license before they can fly UAS. Rather than require licenses, AUVSI recommends that each operator take a knowledge-based test, a suggestion opposed by professional pilot unions, who prefer the operator be a pilot or at least someone with substantial knowledge of operating within the air transportation system.

“We certainly think that greater levels of knowledge and demonstrated skill makes sense” for commercial operations, said Wynne, a commercially rated pilot.

Whether FAA requires a UAS operator to be licensed could be moot. Even if FAA doesn’t mandate licenses, insurance companies could demand it, said Wynne. In some instances, the company for which the UAS operator works could require a proven level of proficiency.

Asked if hobbyists were to blame for giving the UAS industry a black eye, Wynne said: “I don’t think it is a question of blame. It is a question of increasing the situational awareness of the UAS operator.”

Perhaps, but a few days before ShowNews interviewed Wynne, a quadcopter drone and an American Airlines flight on final approach at night into Dallas Love field nearly collided.

AUVSI collaborates with the Academy of Model Aeronautics, which represents builders of remotely controlled aircraft. Operators of these aircraft are unregulated, but have rules of operation. The Academy is working with AUVSI on its “Know Before You Fly” campaign, which educates the UAS operator on increasing situational awareness and other elements of flying. AUVSI is encouraging UAS makers to insert educational materials inside all UAS kits, Wynne said.

An AUVSI economic impact study found that the UAS industry – which includes military and commercial markets – would add more than 100,000 jobs and USD82 million to the economy in the first ten years after UAS becomes part of the U.S. airspace system.