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US stock market daily report (December 30, 2013, Monday)

December 31, 2013, Tuesday, 05:26 GMT | 00:26 EST | 09:56 IST | 12:26 SGT
Contributed by Millennium Traders

The Federal Aviation Administration made a move on Monday to open the skies to aerial drones by authorizing six sites where unmanned aircraft can be tested for a variety of uses. The first test site is expected to be open in six months and the sites will operate at least until February 2017. The test sites are congressionally-mandated that will conduct critical research into the certification and operational requirements necessary to safely integrate Unmanned Aircraft Systems [UAS] into the national airspace over the next several years. Action from the FAA will give companies, universities and other entities locations at which to test much broader use, such as crop spraying, catching exotic-animal poachers or delivering packages.

Federal Aviation Administration Administrator Michael Huerta told reporters, "It provides the platform for this research to be carried out on a very large scale across the country." Huerta said the FAA would first address the use of drones in small civil applications and is expected to issue a proposed rule in early 2014.

Test sites will be developed by the University of Alaska, state of Nevada, Griffiss International Airport in New York, North Dakota Department of Commerce, Texas A&M University at Corpus Christi, Virginia Polytechnic Institute and State University, which includes locations in New Jersey.

"These test sites will give us valuable information about how best to ensure the safe introduction of this advanced technology into our nation's skies," Transportation Secretary Anthony Foxx said in a statement. The FAA received 25 applications from 24 states. The FAA considered geography, climate, location of ground infrastructure, research needs, airspace use, safety, aviation experience and risk in selecting the test site locations. In totality, these six test applications achieve cross-country geographic and climatic diversity and help the FAA meet its UAS research needs.

A brief description of the six test site operators and research that will be conducted into future UAS use:

University of Alaska: The University of Alaska proposal contained a diverse set of test site range locations in seven climatic zones as well as geographic diversity with test site range locations in Hawaii and Oregon. The research plan includes the development of a set of standards for unmanned aircraft categories, state monitoring and navigation. Alaska also plans to work on safety standards for UAS operations.

Nevada: Nevada’s project objectives concentrate on UAS standards and operations as well as operator standards and certification requirements. The applicant’s research will also include a concentrated look at how air traffic control procedures will evolve with the introduction of UAS into the civil environment and how these aircraft will be integrated with NextGen. Nevada’s selection contributes to geographic and climatic diversity.

New York’s Griffiss International Airport: Griffiss International plans to work on developing test and evaluation as well as verification and validation processes under FAA safety oversight. The applicant also plans to focus its research on sense and avoid capabilities for UAS and its sites will aid in researching the complexities of integrating UAS into the congested, northeast airspace.

North Dakota Department of Commerce: North Dakota plans to develop UAS airworthiness essential data and validate high reliability link technology. This applicant will also conduct human factors research. North Dakota’s application was the only one to offer a test range in the Temperate (continental) climate zone and included a variety of different airspace which will benefit multiple users.

Texas A&M University Corpus Christi: Texas A&M plans to develop system safety requirements for UAS vehicles and operations with a goal of protocols and procedures for airworthiness testing. The selection of Texas A&M contributes to geographic and climactic diversity.

Virginia Polytechnic Institute and State University (Virginia Tech): Virginia Tech plans to conduct UAS failure mode testing and identify and evaluate operational and technical risks areas. This proposal includes test site range locations in both Virginia and New Jersey.

The FAA is confident that the agency’s research goals of System Safety & Data Gathering, Aircraft Certification, Command & Control Link Issues, Control Station Layout & Certification, Ground & Airborne Sense & Avoid and Environmental Impacts will be met, across the six applicants. Initial rules governing commercial operation of drones will be written by the FAA before 2015. The test sites will operate longer, allowing rules to evolve with further testing, Huerta said.

Drones are smaller and are less costly alternatives to manned aircraft as well as a growing business for aerospace companies such as AeroVironment, Inc. (AVAV-NASDAQ), Boeing Company (BA-NYSE), Lockheed Martin Corporation (LMT-NYSE) and Northrop Grumman Corporation (NOC-NYSE). Beyond military capabilities, drones are useful to businesses and researchers. Plans have recently been unveiled by Inc. (AMZN-NASDAQ) to use drones to deliver small packages to homes.

By year 2023, global spending on unmanned aircraft will nearly double to $11.6 billion, according to the latest estimate by aviation and aerospace industry research firm Teal Group.

Over a decade, the industry could contribute more than $80 billion to the U.S. economy and create more than 100,000 jobs, per the industry group the Association for Unmanned Vehicle Systems International (AUVSI). Drones continue to raise concerns over privacy and safety since they could be used for spying or could interfere with already crowded airspace.