Best Practices for Drone Operations in Europe How to Optimize The Drone Operations for Urban Areas and Remote Islands in Indonesia

International Webinar – 17th December 2020

Air Transportation Research and Development Center - Research and Development Agency of Transportation, Ministry of Transportation, Jakarta - Indonesia

Prof. dr. W. Dewulf THE DRONE MARKET The future looks promising The UAS market has a huge forecasted growth

Continued double digit growth as from now till 2030 on market and hence product sales are envisaged, both in the US and Europe.

Source : BCG, 2017, Drones go to work The future looks promising The UAS market has a huge forecasted growth (2)

The number of drones will increase proportionally with the market up to 2035. The governmental and commercial market is by far the most interesting.

Source : SESAR, European Drones Outlook Study, Unlocking the Value for Europe, Nov 2016, Eurocontrol The EU drone market is worth SESAR European Drones Outlook Study / 30 / over 10 billion EUR in 2035! (SESAR) The bulk part of the revenues will be from the commercial and governmental, mainly Fioriginatedgure 10: Value afromt-stakerelated for Europeservices.an demand a cross entire spectrum

Annual economic impact exceeds EUR 10 Commercial / government the leading billion by 2035 and EUR 15 billion by 2050 contributor given influence of services

Annual Impact (Nominal EUR in billions)1 Annual Impact (Nominal EUR in billions)1 Over EUR 15 billion total ~70% in Over EUR 10 ~0.5 Leisure2 services billion total Other (Maint. ~70% in ~2.0 & ~0.5 services ~1.5 Commercial / ~14.5 Government ~10.0 Services ~11.0 ~7.5

Defence3 ~2.0 ~2.5 Products ~1.0 ~1.5

2035 2050 2035 2050

1. Represents long term steady state demand; nominal figures excluding inflation adjustment; figures rounded to the nearest 0.5B; represents Europe demand (i.e., excl. imports / exports) 2. 1-1.5M units at future prices expected on average to be below EUR 500 per unit given availability at this level of pricing today and expectation for overall average declines long term 3. Based on avg. of EUR 1.5-2.0M/unit with ~4% fleet growth & ~10% replacement factor (or ratio of US to EU fleet:10-15% of $1.78B growing YoY at ~5%); R&D at ratio of ~60% of procurement Source: Industry reports, US Department of Defense, Selected companies' annual reports, expert interviews, BCG analysis Source : SESAR, European Drones Outlook Study, Unlocking the Value for Europe, Nov 2016, Eurocontrol Key takeaway Significant value is at-stake as European drone market worth over EUR 10 billion annually in 2035 and over EUR 15 billion annually in 2050

Overview of the drone market value chain This evolution to government and commercial as the largest potential source of value for Europe is based on the importance of services beyond products. This service component is really relevant for the government and commercial sectors but not the defence and leisure markets that are shown for their product-orientated value.

Some indirect activities will occur in the leisure domain i.e., drone racing and product insurance although these are expected to remain niche and are captured in the extended benefits of the drone market or, in the case of insurance, partially covered already in the production value as insurers replace broken units. The leisure market is estimated to have a long term annual sales volumes of 1 million to 1.5 million drones. Average prices are estimated to be under or near EUR 500 over the coming years given the today's already decreasing prices and likelihood that further unit growth as a consumer electronic will come more from lower priced drones that already can be purchased for a few hundred euros30. Together this calls for a market impact of approximately EUR 0.5 billion for European demand.

30 Goldman Sachs, Drones flying into Mainstream

NOVEMBER 2016 The majority of EU use of drones will be BVLOS SESAR European Drones Outlook Study / 22 /

BVLOS operations will dominate the unmanned aviation industry. Figure 7: Demand outlook by type of mission

Split between 'certified' and other, primarily Evolution of drone demand view through 2050 'specific', drones under EASAframework

2035 2050 Total drones in activity (K) Specific Certified Specific Certified

~415 Others - ~395 -- ~5 -- ~5 tethered Unmanned -- <1 -- ~10 aviation Long endurance -- <1 -- <1 surveying ~200 BVLOS with ~95 -- ~115 -- light load1 BVLOS ~185 -- ~180 -- surveying2 Localized VLOS ~110 -- ~100 -- surveying3

2025 2035 2050 Total ~390 ~5 ~400 ~15 excl. tethered ~390 ~1 ~400 ~10

1. Includes agriculture spraying and delivery drones; 2. Includes "more automatic long range surveillance" drones, e.g. centr alized police drones, agriculture remote sensing, monitoring of pipeline, power-lines and railway; 3. Includes inspections for energy sites (solar, oil & gas, etc.), telecommunication towers, mining & c onstruction sites, etc., and in-vehicle police & fire response units Note: figures are rounded to the nearest 5K units; differences in totals due to rounding Source: Press search, expert interviews with technology providers, operators, future users in each sector and policy makers, Eurostat, BCG analysis

Source : SESAR, European Drones Outlook Study, Unlocking the Value for Europe, Nov 2016, Eurocontrol A distinction is drawn between 'certified' drones and 'specific' drones in anticipating categories being defined as part of EASA's pending framework. 'Specific' drones, representing medium levels of risk, have been defined generally as being below 25 kilograms and flying near or below 150 metres. The 'certified' category was used for drones flying well above 150 metres i.e., have impact on controlled airspace as well as uncontrolled airspace, including Class G or of sufficient size to create more substantial risk. These categorisations should not be considered as absolute as weight and size are not specifically used for determining whether a mission is classified under the 'certified' versus 'specific' label and instead the risk assessment of individual missions (including their proximity to densely populated areas) will be the overall deciding factor. The 'specific' category has been used as a general rule for commercial applications over using the 'open' category, designated for low risk missions where training is not required. Portions of the 'specific' category could end up being classified as 'open' under the future EASA performance-based framework, especially those missions remaining within visual line of sight outside of densely populated areas.

Key takeaway The majority of government & commercial potential demand is for drones

expected to perform beyond visual line of sight (BVLOS) missions

Overview of demand forecast by industry sector Driving the study's estimates are the business cases and industry dynamics within each individual sector. A breakdown of how different sectors impact the forecast is depicted in the exhibit below with 'other growth' being the combination of mining & construction, media, insurance, telecommunications, real estate, university & research domains. Following is an overview of the demand parameters within each sector with additional details available in the annex.

NOVEMBER 2016 Requirements needed in SalESAlR areas European D ofrone sairspace Outlook Study / 3expertise8 /

MannedFigure 12 and: Impa cunmannedt on airspace of d raviationones measu rwilled in fultimatelylight hours and d mergeistances into one single controlled airspace.

All flight statistics represent primary area of airspace Controlled airspace Controlled + Uncontrolled Manned aviation in Unmanned aviation in controlled airspace1 controlled airspace Hrs ~33M Hrs ~7M Kms ~20B Kms ~4B

Manned aviation often in Long enduranc e uncontrolled airspace2 surveying & monitoring Hrs ~2M Hrs <0.1M Kms ~0.6B Kms <0.1B

Very low level "VLL" airspace (initially at 150m or 500 ft) Densely populated usage Remote infrastructure & Leisure usage rural usage Hrs ~250M Hrs ~20M Hrs ~80M Protected Sites Kms ~15B Kms ~1B Kms ~1B

1. Includes business aircraft and scheduled airlines; 2. Includes rotorcraft and general aviation flight time statistics; however these aircraft do utilise all areas (incl. VLL) such as rotorcraft landing on buildings and hospitals that would be impacted by VLL drone traffic Note: Flight distance (kms) and time (hours) for 2050 So urce: ATM Master Plan, BCG analysis

Source : SESAR, European Drones Outlook Study, Unlocking the Value for Europe, Nov 2016, Eurocontrol Leisure drones, while increasing dramatically in number, are still on average only flown for a few hours annually. Beyond visual line of sight operations, including above the VLL, may impact all classes of airspace and have a much greater impact on the airspace than leisure drones given they will likely fly multiple hours a day. This is expected to be especially true in the long term for delivery and public safety & security drones operating in urban environments. First responders leveraging the technologies routinely as they respond to situations, including potentially with station-operated beyond visual line of sight drones, will need to safely operate alongside manned aviation and delivery drones in dynamically changing locations. In total, all operations that are primarily performed at very low levels are estimated to represent the majority of flight time to be accounted for and thus require additional technology to support safe operations.

Key takeaway More robust technology and an accepted concept of operations to incorporate

VLL activity is required given drones significantly impact all areas of the airspace

Research & development priorities for Europe Enabling successful safe operations beyond visual line of sight are the core of commercial & government market potential; this will require the availability of a variety of technologies. Further, many of these technologies will require multiple forms to account for the various types of missions being performed at very low levels and also in controlled and uncontrolled airspace (i.e., different development to prevent a collision with a static building than a collision with a fast travelling manned aircraft). Several of these technologies are suggested to require European level support to

NOVEMBER 2016 THE KEY SUCCESS FACTORS FOR DRONEPORTS Our preliminary The KSF’s AHP results Factors to establish a successful drone test centre

Infrastructure Operations Services

Dedicated air Paved Ecosystem space

Combination Service & support ATM / UTM manned & unmanned unmanned aviation

Training school Test facilities Fee structure unmanned aviation

9 Our reseach The KSF’s AHP results

10 THE COMPETITIVE LANDSCAPE OF DRONEPORTS IN EUROPE An overview of Drone facilities within Europe UAS Finland

DroneHub GAE Drone Center Valkenburg NAME AIRSPACE ALTITUDE Dutch Drone Centre UAS Denmark Aviolanda DronePort 84 km2 2000 ft

West Wales 2 Space53 UAS Denmark 867 km 3000 ft DRONEPORT BCN Drone 25 km2 4000 ft ID2Move Center Drones-Center West Wales 8600 km2 Unlimited Airport (over sea)

CESA Drones 28 km2 3000 ft CESA Drones

BCN Drone Center

Atlas Center

GoZo Innovation Hub Airport Eelde An overview of Ameland Oostwold Drone facilitiesTexel within International the Airport Benelux Drachten Stadskanaal

Hoogeveen Airport Airport Teuge Hilversum Twente Airport The Hague Airport

Midden Zeeland Breda Woensdrecht Brasschaat Ostend Bruges Hoevenen Keiheuvel Airport Antwerp International Airport Leopoldsburg Moorsele International Airport Grimbergen Maastricht Aachen Airport Kortrijk Wevelgem Kiewit DRONEPORT Namur

Cerfontaine Saint-Hubert THE LONG TERM STRATEGY FOR DRONEPORTS Fact 1 E-commerce is a growing phenomenon and source of air growth

Based on a multitude of sources e-commerce is cited frequently as the source for growth. The phenomenon as such is still growing. Drone might be used for the last mile delivery for remote area or ultra fast delivery, Amazon, UPS and Goodle are currently performing tests.

global retail e-Commerce sales – in USD bn

4 500 30% 4 057,9 25,5% 4 000 total global e-com 23,7% 25% 22,9% 3 418,2 sales 3 500 21,6% China 19,5% USA 3 000 2 859,6 18,7% 20% UK

2 500 2 352,4 Japan 15% 1 914,7 Germany 2 000 South Korea 1 548,3 1 500 10% France Canada 1 000 India 5% 500 Australia Other 0 0% 2015 2016 2017F 2018F 2019F 2020F

source: Luchtvaartnieuws, 3rd September 2020 source: eMarketer 2016, S@S analysis

15 Fact 2 Integrators are hitting hurdles

Due to the significant growth in the express delivery market in the last couple of years, the integrators are hitting hurdles to accommodate this growth.

This is mainly because: • Main (e.g. AMS, LHR, BRU, CDG, LIN, LHR, MAN, …) are facing capacity shortages; • More and more airports are imposing night-bans (e.g. FRA, BRU); • Airports are tightening their noise-limits.

For these reasons and because the market will remain growing significantly next years, the integrators are looking for growth possibilities at secondary airports with significant expansion possibilities. On top of that, customers expect more and more same-day delivery. The typical hub-and-spoke system of integrators is gradually replaced by point-to-point network.

A paradigm shift in operational business models is envisaged for the integrators. Fixed wing drones might play a role herein.

source: TechNavio, 2020 Fact 3 Fixed wing drones will be required for bridging longer distances

Multicopter drone

Ttotal = W + Tf Tf

W Fixed wing drone

Cessna 172 CD/CL = 1/10 A320 in cruise CD/CL = 1/16 T A380 in cruise CD/CL = 1/20 T = W (C / C ) total D L Albatros CD/CL = 1/20 Herring gull CD/CL = 1/10 Paraglider CD/CL = 1/11 W

17 F Fact3 ixed SPEED wing drones will be required for bridging long PAYLOAD er distances Fact 3 Fixed wing drones will be required for bridging longer distances

Compared to other transport modes (road transport and traditional air transport), cargo drones could be competitive. Although drones will never be able to carry the same amount of cargo, faster delivery compared to trucks as well as flying into destinations not viable to serve with full freighters are possible.

O: EBST D: LEBB Dist.: ± 1,030 km

SPEED ± 70km/h ± 750km/h ± 250km/h

PAYLOAD ± 20,000 kg ± 20,000 kg - ± 1,000 kg ± 40,000 kg AVERAGE COST ± €0.10/kg ± €0.75/kg ± €1/kg

TIME SAVING 00u00 - 13h00 - 17h00

Taken into account a trip to Bilbao (± 1,030 km), a truck will be less expensive, however, will take twice as much time. Compared to the traditional aircraft, a later cut-off time could be offered as the traditional sorting process will be removed from the transport process.

19 Fact 4 Integrated manned and unmanned aviation is not envisaged in the mid-term future “While requirements will vary with every application, robust UTM systems are essential to enable safe, low- altitude operations within the national airspace. The beacons and other infrastructure are not yet in place for such systems. As noted earlier, applications that require high-altitude flights will not be viable until UTM systems can communicate with air-traffic-control systems for commercial aircraft. All UAS applications also require counter-UAV solutions to detect and safely disable unauthorized vehicles in the airspace.” Mc Kinsey, 2017

Most major airports will be reluctant to mix unmanned traffic with manned traffic until technology has matured and safe operations have been demonstrated at smaller airport.

source: McKinsey, 2017 20 Spare parts distribution drone range (visual)

EBST

1000 km Express companies drone range (visual)

Fixed wing drones are expected to have a payload of 1 tonne and a range of 2000km. With an average speed of 250km/h a large part of Europe is within 4 to 6 hours reach.

EBST

2000 km 1500 km 1000 km For illustration purposes The DHL hub system operation distangled

Intercontinental hub peak operating window

Single wave operation 100+ movements

Regional hub peak operating windows 20-30 movements

Departure wave Departure wave

Gateway peak operating windows 2-6 movements Today no direct connection Departure wave from origin Arrival wave from hubs

23 Europe.4 The red points in Figure 1 represent the four main airports – i.e. the airports in The potential for drones in the positions 1-4 in Table 2 that shows, for each integrator, the top ten European airports Thein te subrms of-hubs availabl aree fre iinterconnectedght tons (AFT).5 It is ebutvident not the cthehoice gateways of the integrators to locate their main hubs close to the industrial belt of central Europe where a relevant portion of European industry is located.6

source: Malighetti et al., 2016

! Figure 1 - Integrator European air networks.

DHL exhibits the densest network, with the main hub located in Leipzig (LEJ) airport, where the traffic volume (27,827 ATK) is about three times the volume registered in the second and third airports (namely East Midlands, EMA, and Brussels, BRU). The fourth airport is Milan/Bergamo Orio al Serio (BGY). FedEx main hub is Paris Charles de Gaulle (CDG) whose cargo volumes is about four times the amount FedEx registers at the second main airport, namely London Stansted (STN). Cologne (CGN) and Milan Malpensa (MXP) are respectively the third and fourth biggest airport in the FedEx network. TNT hub is Liege (LGG), where the cargo volume operated by the Dutch company is even tenfold the one registered in the second main airport, namely East Midlands !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4 Figure 1 has been created through the two R packages maps and geosphere. 5 AFTs at each airport are computed as the sum of the payloads of arrival and departure flights. 6 It is the area within northern France, Belgium, north-west Germany, middle Elbe basin (Dickinson, 2013.)

! 5! For illustration purposes Express delivery cycle DHL

DHL Local DHL Country Transport to Station Gateway DHL BRU hub CUSTOMER (Origin) (Outbound) 23h30 17h30 19h30 22h30 Night sort + reload 01h30

DHL plane departure DHL Local DHL Country Station 02h30 CONSIGNEE Gateway (Destination) 09h00 (Inbound) 08h00 05h30 For illustration purposes Express delivery cycle DHL (2)

DHL Local DHL Country Transport to Station Gateway DHL BRU hub CUSTOMER (Origin) (Outbound) 23h30 17h30 19h30 22h30 Night sort + reload 01h30

DHL plane departure DHL Local DHL Country Station 02h30 CONSIGNEE Gateway (Destination) 09h00 (Inbound) 08h00 05h30 For illustration purposes Express delivery cycle DHL (2)

DHL Local DHL Country Station Gateway CUSTOMER (Origin) (Outbound) 17h30 19h30 22h30

DHL Local DHL Country Station CONSIGNEE Gateway (Destination) 09h00 (Inbound) 08h00 05h30 For illustration purposes Express delivery cycle DHL (2)

DHL Local DHL Country Station Gateway CUSTOMER (Origin) (Outbound) 20h30 22h30 01h30

04h00

DHL Local DHL Country Station CONSIGNEE Gateway (Destination) 09h00 (Inbound) 08h00 05h30 New logistics operating business models arise Same day delivery paradigm

Ordering in the morning for delivery in the evening cannot be fulfilled by the current integrator network (see previous slides). A second day wave will be required to meet customers’ expectation. Instead of reactivating the apparatus during the day by manning the sorting hubs and aircraft, alternatively drones could provide a more cost- efficient solution.

source: McKinsey, 2020

29 New logistics operating business models arise Same day delivery paradigm (2)

However, initially same days volumes will be much lower compared to next day deliveries. Membership fees can help offset increased shipping costs, but retailers may need to pursue other cost-cutting measures. Drones might provide precisely this solution.

source: McKinsey, 2020

30 Our proposed strategy for Indonesian Drone Market Strategic differentiators in the value chain Demands for more payload and longer range missions will keep rising. This will entail a shift towards fixed wing drones requiring a runway for T/O and landing. We envisage these drones to be deployed initially and primarily in the cargo industry.

Less noise >1000 Kg Less moving parts Fixed wing Less maintenance >100 Kg More energy efficient

Multi-copter

mass Payload Payload Mono-copter Multi-copter

0 Kg Scale will shift with evolution of 0min Mission duration >90min electric battery technology

Source : own analysis Fixed wing cargo drones are here to stay!

Celera by Otto aviation Natilus by Natilus Inc.

Full cargo version

by Natilus Inc.

32 Our mid- and long term Conclusion for the Indonesian Drone Market

1. Multicopter drones will remain a niche market product for urgent or special B2B deliveries and inspections, both in urban as rural areas

2. Fixed wing drones will play a significant role in urgent goods deliveries in E-commerce, spare part deliveries, or cargo deliveries to remote locations

3. Clearly identified droneport locations, roll-out of ATM/UTM technology and the further development of a Drone Research Institute will further enhance Indonesia’s competitive position in Asia.

4. A Strategic Masterplan in mandatory to make it a success.

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