The FAA official in charge of integrating drones into the National Airspace discussed for the first time on May 8, 2014 a near-miss that occurred in March between a drone and an airliner.  The revelation highlights the risks associated with Congress’s mandate to  “integrate UAS [Unmanned Aircraft Systems] into the National Airspace System by September 2015.”  It also highlights the critical need for insurance coverage.

The blog post on May 3, 2014 discussed the profound concerns General Aviation pilots are feeling about a program that is underway for the Federal Aviation Administration to test the viability of integrating drones, also known as “Unmanned Aircraft Systems,” or UAS, into the airspace currently used only by manned aircraft.  The risks of such an integration are of both the obvious and the not-so-obvious kind.  The most obvious risk, of course, is that the Airspace System will not be able to keep manned and unmanned aircraft separated from each other in flight 100% of the time.  Not surprisingly, that is the risk that has pilots fretting.

On May 9, less than a week after the May 3 blog post was published, the BBC reported on a near collision between a UAS and a U.S. Airways flight that was landing at Tallahassee Regional Airport in Florida.  Since that report, numerous news services have picked up and expanded on the story.  The incident occurred March 22 at an altitude of 2300 feet.  It had not been previously reported by the FAA.  But Jim Williams, the head of the FAA’s Unmanned Aircraft Systems Integration office, spoke about it for the first time on May 8 at the 2014 Small Unmanned Systems Business Expo in San Francisco.  “The airline pilot said that the UAS was so close to his jet that he was sure he had collided with it,” Williams said.  “Thankfully, inspection of the airliner after landing found no damage.”

The Youtube video of Mr. Williams’s presentation, incidentally, is worth watching.  (Move the timeline for the 6-hour video to exactly 3 hours, which is where his presentation begins.)

As mentioned in the May 3 post, the FAA Modernization and Reform Act of 2012 requires the FAA to establish a program to “integrate UAS into the National Airspace System by September 2015.”  Interestingly, the FAA does not believe that this means UAS will be flying commercially by that time.  In answer to a question about whether the skies would be “opened up” to commercial operation of drones by the September 2015 deadline, Mr. Williams responded that that is not what Congress mandated in the FAA Modernization and Reform Act of 2012.  Instead, according to Williams, the Act requires the FAA to come up with “a comprehensive plan for what safe integration would look like, by 2015.”  Providing a vision of what such operations “would look like” is quite different from actually commencing operations.

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 “The airline pilot said that the UAS was so close to his jet that he was sure he had collided with it.”

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The near-miss over Tallahassee was the result of a drone that was obviously being operated illegally.  Current regulation permits UAS operation only up to an altitude of 400 feet and only while maintaining constant visual contact with the aircraft.  Commercial use of drones is prohibited except where the FAA has given a special exemption, which are currently granted only on a case-by-case basis.  No matter how pilots currently feel about sharing airspace with drones, there are a great many of them already in private hands.  That genie is already out of the bottle and rogue operators will be a potentially tragic fact of life whether drones ultimately operate commercially or not.  (Pilots, of course, would point out that, the more drones there are in operation, the bigger the pool will be of potential rogues.)

Williams makes another interesting point in his presentation, one that is relevant to both the commercial operation of drones and to issues relating to insurance coverage for those operations.  The level of regulation of most any activity, according to Mr. Williams, runs the gamut from no regulation at all, usually for purely recreational behavior, to close and onerous regulation, usually for commercial behavior.  The rationale, he says, is that we have concluded through long experience and study that people who are engaged in behavior for a purely commercial purpose are more willing to take risks than people who are engaged in similar behavior only for their amusement or recreation.  He makes the disclaimer –as perhaps was prudent in light of the audience of entrepreneurs to whom he was speaking, all of whom are eager and impatient for the widespread commercial use of UAS — that we as a society may be right or wrong about that judgment, but that this is a part of the rationale for all levels of regulation.

This view, from the guy who is responsible for integrating UAS safely into the National Airspace, suggests that the FAA’s ultimate “plan for what safe integration would look like” is going be to one that is cautious, slow, incremental, and heavily regulated.  That is, admittedly, little more than one person’s impression from the tenor and content of Jim Williams’s presentation on May 8.  But if the impression is accurate, it would be surprising if minimum requirements for insurance coverage were not an important part of the vision for what “integration would look like.”

There are, of course, a great many exciting commercial applications for drones that could make currently risky endeavors much more safe without interfering with flight by manned aircraft.  Photographic inspection of high tension wires at the top of power line towers, inspections that currently require men and women to undergo the peril of climbing several hundred feet into the air, is one.  Any pilot who flies that close to power lines is either doing so illegally or because an emergency of some kind has given him no choice.  Use of drones in the motion picture industry, where coordination with the FAA and air traffic control could result in temporary flight restrictions, or TFRs, that prohibit manned aircraft from using airspace at the time of filming, is another.  (Violating a TFR can mean the suspension or even the revocation of a private pilot’s license.)

If, as the FAA presentation at the 2014 Small Unmanned Systems Business Expo suggests, integration of drones into commercial operation is going to be incremental and cautious, as all responsible stakeholders believe it should be, then the kinds of insurance products owners and operators will need to buy — property, liability, cyber, data breach, business interruption, contingent business interruption — will serve the purpose that insurance is always supposed serve: to spread the risk of loss and catastrophe among a large pool of beneficiaries.  If the risks are ultimately manageable and the market for insurance remains open, there might well be some room in the National Airspace for UAS.

What happens when the inevitable claims begin to get made — insurance companies being insurance companies — is another story, one to be told another day.