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FAA Opens Door to Commercial Drone Market

By Motley Fool Staff – Sep 28, 2016 at 3:35PM

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Two Motley Fool analysts discuss the potential impact of FAA regulations for the commercial drone market.

When someone mentions drones, your mind may automatically go to products such as GoPro's (GPRO 1.34%) new Karma drone. However, the commercial drone market could potentially add $82 billion to the U.S. economy in the next 10 years, according to the Federal Aviation Administration, which bought in new rules and regulations for unmanned aircraft systems (UAS).

In this clip from Industry Focus: Consumer Goods, Motley Fool analysts Vincent Shen and Sarah Priestley discuss these regulatory changes.

A full transcript follows the video.

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This podcast was recorded on Sept. 20, 2016.

Vincent Shen: When it comes to drones, bigger picture, away from GoPro, our discussions have really been focused on the amateur hobbyist market. Even the professional consumer market. But, in actuality, that's really just a small piece of the opportunities in the drone market overall. Over the summer, back in June, the Federal Aviation Administration issued its official rules for commercial drones, which really opened the door to their use in a lot of industries. Those rules went into effect late last month. And honestly, the commercial drone market is going to dwarf the consumer drone market.

Laying a little bit of foundation in terms of how these commercial drones are coming into play initially, can you tell us a little bit about the framework for the rules, and how that's impacting their use?

Sarah Priestley: Yeah, absolutely. I think it's important for people to know that prior to this period, it was illegal to use commercial drones unless you had a section 333 exemption from the FAA. This is actually the second time that they have been asked to come up with these rules and regulations. They were asked in 2012 and they missed the deadline. So it's been something that's on Congress' mind for a while, foreseeing this activity.

But, as you said, the new rules came out in August 2016. I'll just read you a brief excerpt from the press release: "The FAA has finalized new operational rules for routine commercial use of small, unmanned aircraft systems, opening pathways toward fully integrating UAS into the nation's airspace." It's quite a bold claim, and I think these are almost baby steps. Right now, pilots have to keep drones within line of sight, which reduces a lot of opportunities in terms of delivery, especially, for retail like we're looking at with Amazon Air and things like that. But, at the same time, it's a big step forward. The same press release suggested that it could add $82 billion to the U.S. economy and create 100,000 new jobs in the next 10 years. It seems like a baby step, but it's a step in the right direction.

Sarah Priestley has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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