Aviation rule changes could hurt consumer businesses in the short run

By Tu Lei Source:Global Times Published: 2017/6/15 17:43:39

CAAC to tighten drone regulations


A man looks at a drone in Linyi, East China's Shandong Province. Photo: IC



 

The hot-on-fire drone market in China, the world's largest manufacturer of consumer drones, now faces a new round of stringent regulation after several files were released in the last two weeks stating that the Civil Aviation Administration of China (CAAC) vows to enhance regulation of the market.

On Wednesday, the website of the East China Regional Administration of the CAAC said it will make more efforts to enhance regulation of drone flying between the air force and civil aviation regulators.

Starting June 1, China requires civilian drones weighing more than 250 grams to be registered under real names before August 31.

Drone disruptions

The direct reason behind the rules is that several Chinese civil airports have witnessed a series of drone disruption accidents, causing many commercial flights to be delayed or rerouted.

The CAAC website noted that, since last year, airports across China, including those in Beijing, Shanghai, Shenzhen, and Wuhan, capital of Central China's Hubei Province, have been experiencing a series of drone disruptions.

The worst disruption was in Chengdu, capital of Southwest China's Sichuan Province, where there were eight disruptions in April, six of which led to 138 flights being rerouted. In May, one drone disruption in an airport in Chongqing caused 58 flight cancellations and delays for over 6,000 passengers. 

Flying without approval

Xinhua reported Monday that a man in Southwest China's Yunnan Province was detained for five days for flying a drone in the no-fly zone at the Dianchi International Convention and Exhibition Center in Kunming, capital of Yunnan.

Chinese civil aviation authorities announced on Tuesday that around 45,000 civilian drones in China are registered under real names, but some users still fail to register with authentic personal information.

Currently, privately owned drones are becoming increasingly popular in China, however, this popularity results in a lot of drones being flown illegally.

The market for unmanned aerial vehicles in China, the technical name for drones, is expected to stand at 75 billion yuan ($11 billion) by 2025, according to a report released by market consultancy iResearch.

However, in China, almost all drone flying needs to get approval from the regulator. Getting approval can be quite difficult which may explain why there is still a large number of drone owners flying secretly, and illegally.

Impact on companies

The introduction of the regulations, to some extent, may hurt the business of Shenzhen-based DJI, the world's biggest consumer drone maker, as earlier rumors claimed that DJI may quit the Chinese market if rules become tighter.

DJI later denied the rumors and said it will actively support effective and scientific regulations.

The introduction of the rules could hurt the sales of other drone producers, but not too much. In fact, the industry is cooling down after ''drone fever'' peaked in 2015 and 2016 when a lot of hot money poured into the market.

However, since the end of last year, drone fever has started to cool.

Media reported that the global drone industry gained a fundraising, totaling $5.5 million in the third quarter of last year, compared with 134 million of investment in the same period in 2015, a decline of nearly 60 percent.

Zerotech, the manufacturer of portable, pocketable selfie drones, cut more than 100 staff at the beginning of this year, according to media reports. 

Earlier, another drone producer, Ehang, based in Guangzhou, capital of South China's Guangdong Province, cut 70 positions in December 2016. The manufacturer had raised $42 million and released their Ghost 2.0 drone in August 2015.

Although start-up Zerotech said the layoff was due to strategy adjustment, it will increase the input of core business, suggesting the cooling of drone fever is due to a slow-growing demand from the market.

It is necessary to have strict control over drone flying in China and there is expected to be further implementation of even more regulatory policies.

For a short time, it could hurt the sales of producers, but in the long run, it could help the industry develop in a more healthy way.



Posted in: INSIGHT

blog comments powered by Disqus