FOREMOST UAS RANGE BUSINESS PLAN: GROWING ALBERTA’S AEROSPACE ECOSYSTEM

CANADA’S OPPORTUNITY FOR LEADERSHIP AND ECONOMIC GROWTH IN UNMANNED AVIATION SYSTEMS

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Executive Summary

The Foremost/Canadian Centre for Unmanned Vehicle Systems (CCUVS) is proposing a unique opportunity for Canada to claim a global leadership position in the unmanned aircraft systems (UAS) industry. The civil and commercial applications of UAS technology are poised for tremendous growth and there is a growing need for system development and training facilities that can accommodate Beyond Visual Line of Sight (BVLOS) flight.

In July 2014, CCUVS received the necessary approvals from NAV CANADA and Transport Canada to manage 700 square nautical miles (2,400 square kilometres) of restricted airspace near the Village of Foremost, Alberta. The airspace was published in the Canada Flight Supplement effective November 13, 2014 and provides CCUVS/ Foremost with the BVLOS capabilities that so many UAS companies require.

The Foremost UAS Range has many of the necessary requirements to be a unique facility for UAS companies to train and develop this technology. With a relatively small investment in facilities and ramp-up costs, Foremost would leapfrog ahead of other available training options to become a world-class facility with an unmatched combination of location, geography, topography, weather, size, facilities, and restricted airspace for BVLOS flight.

The UAS industry is evolving quickly, so Foremost has a short window of opportunity. There are currently companies expressing interest in flying their UAS at Foremost and they are searching for alternatives. There are clear first-mover advantages if CCUVS/Foremost is able to address its current weaknesses (facilities and investments in ramp-up) in a timely manner. The industry is not standing still and Foremost/CCUVS is positioned to champion Canada’s leadership in UAS training, development and research with a facility that can be marketed to the world.

Unmanned Aircraft Systems

An unmanned aircraft system (UAS) is comprised of an unmanned aircraft vehicle (UAV), a control system such as a ground control station (GCS), a communications link (specialized data transceivers), and other specialized equipment (usually sensors). An unmanned aircraft vehicle (UAV) is an aircraft without a human pilot on board. Its flight is controlled remotely by a pilot on the ground utilizing a ground control station and controlled internally by an onboard autonomous control system (autopilot). (The term “remotely piloted aircraft system” (RPAS) is also sometimes used in lieu of unmanned aircraft systems.)

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Sample of Unmanned Aircraft System for Pipeline Inspection:

The preponderance of UAS usage to date has been in defence applications. Although historically some UAS were used in military roles prior to the turn of the century, the greatest usage of UAS has occurred since that time as the technology has advanced and as the number of manufacturers has increased markedly. Globally, there are in excess of 100 manufacturers of UAS. While new systems and manufacturers are appearing in the marketplace routinely and frequently at this point in time, many of the existing manufacturers have produced systems for more than a decade and have thousands or tens of thousands of successful flight hours to their credit.

Civil and commercial applications of UAS have emerged, and the number and diversity of these applications are increasing each year as the technology advances further and as the benefits of unmanned systems are able to be realized. Examples of civil and commercial applications of UAS include search and rescue, forest fire monitoring, pipeline inspection, environmental monitoring, and a variety of surveillance activities such as border surveillance.

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UAS can be categorized into a broad range of classes: micro, mini, small, MALE (medium altitude long endurance), and HALE (high altitude long endurance).

Micro UAVs are tiny and carry no appreciable payload. Mini UAVs are the size of hobby aircraft and might carry a basic, lightweight video camera as a payload and would operate for minutes, often under electric power. Small UAVs have a larger wingspan (as large as 5 meters or more), operate for hours at a time, and carry a payload up to 10 kilograms or more. MALE UAVs typically operate at higher altitudes and, as the name suggests, at extended ranges up to 100’s of kilometers while carrying significant payloads of 250 kilograms or more. Not surprisingly, HALE UAVs are designed to fly higher and longer than MALE UAVs.

CategoryRange (km)

Altitude (m)

Endurance (hrs)

MTOW (kg)

Payload (kg)

Micro <10 250 1 <1 -

Mini <10 150-300 <2 <5 0.5

Small 10-30 3000 2-4 <30 5

MALE >500 15000 24-48 1500 250

HALE >500 50000 24-48 4500-10000 1000+

UAS CLASSIFICATION

This particular taxonomy is not intended to be exact in terms of categorization of UAS, nor is it accepted by all. It is presented here merely to indicate the wide range of available systems each of which have advantages and disadvantages compared to one another and when evaluated against differing requirements and applications.

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Examples:Micro UAV Mini UAV

Small UAV MALE UAV

HALE UAV

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A 2013 study from the Association for Unmanned Vehicle Systems International (AUVSI) has quantified the huge potential economic impact that can be expected from integrating UAS into the United States National Airspace System. Based on their methodology, AUVSI expects a $13.6 billion economic impact in the first 3 years after integration and $82.1B over the first 10 years. They predict the largest opportunity for the US is in agriculture (80%), followed by public safety (10%) and miscellaneous other applications (10%). AUVSI estimates that 100,000 new jobs will be created in the US in the first 10 years after integration.

The opportunity in Canada may be larger than the US opportunity relative to the size of the Canadian economy. In addition to a significant agricultural industry, Canada also has extensive resource based industries including oil & gas with its related infrastructure spread out over a vast land mass.

Within Canada, Alberta is particularly well positioned to grow and expand the UAS industry. In addition to being home to the Canadian Centre for Unmanned Vehicle Systems, DRDC-Suffield, and large resource-based industries (including oil & gas, agriculture, and forestry), Alberta Venture magazine lists the following facts in its September 2013 issue:

Alberta is home to more than 70 companies, military organizations, and educational institutions working on research and development of UAVs

Alberta has more than 200 airports, heliports, and aerodromes 40 per cent of production in the aerospace industry is destined for export markets 25 per cent of Canada’s geomatics and navigation firms are in Alberta 170 aerospace and aviation companies are based in Alberta 12 Alberta firms in the defence electronics niche produce $264 million worth of

products each year Space-related products account for $200 million in revenue to the industry each

year The Natural Sciences and Engineering Research Council of Canada distributes

almost 50 per cent of its funding for space-science study to Alberta universities.

Background on CCUVS

The Canadian Centre for Unmanned Vehicles (CCUVS) was incorporated in April 2007 with a broad mandate related to growing the Canadian unmanned vehicle systems (UVS) sector with particular emphasis on unmanned aircraft systems (UAS). The start-

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up and initial years of operation were largely funded through a 3 year / $3 million grant from the Rural Alberta Development Fund (RADF). In addition, a grant from Western Economic Diversification Canada (WD) provided the $900,000 to purchase a Robonic MC2555LLR UAS launcher which remains a core asset and good revenue generator of CCUVS.

Much research and analysis was conducted in the lead-up to the establishment of CCUVS. In late 2004, Aviation Alberta commissioned a study to ascertain the potential for a national centre. The paper was presented in March 2005 with a validation of the need and interest in moving forward. The CCUVS Business Case was commissioned by Aviation Alberta with a follow-up addendum in August 2006. A more in depth CCUVS Business Implementation Plan was also produced in June 2007.

On August 31, 2006, CCUVS was formally opened by Medicine Hat Mayor Garth Vallely. Much work was accomplished in those early days with significant contributions from the Economic Development Alliance of Southeast Alberta. After incorporation in April 2007, the first CCUVS board meeting was held in June and the RADF funds began to flow in November. By early 2008, a business case for the launcher was completed and a final agreement was reached with WD for funding.

Growing Pains

The original mandate for CCUVS was very broad and touched on many areas directly and indirectly relevant to the UAS sector including: research, technology, standards, training, marketing, test & evaluation, and sector development.

CCUVS grew quickly over the next couple of years. The activity related to development of UAS standards grew significantly, fully supported by the Board and other stakeholders.

Based on communication and direction from Transport Canada, CCUVS put considerable effort over a period of several years toward establishing itself as the authorized third party regulator, on behalf of Transport Canada, for UAS in Canada. CCUVS came to be the equivalent of what Transport Canada already had in place for regulating business aircraft in Canada through the Canadian Business Aviation Association (CBAA), also a private, not-for-profit, third party organization. However, in the course of establishing CCUVS as a regulatory entity, in late 2010 to early 2011, problems arose between Transport Canada and CBAA to the extent that Transport Canada stopped using CBAA altogether. Path to Sustainability

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In 2011, an organizational review was undertaken by the CCUVS Board of Directors. The direction from the Board was to reduce the scope and number of activities, refocus on those activities that would lead to sustainability, and rebuild the organization in this new environment.

From 2011 through 2014, CCUVS has had one full-time Chief Operating Officer and a part-time Bookkeeper. Additional needs were often supplemented by external consultants engaged on an as-needed basis.

Due to the radically reduced resources, CCUVS focused almost exclusively on those activities that can be done on a cost-recovery basis including consulting, training, writing Special Fight Operating Certificate (SFOC) submissions, and UAS launcher rentals.

In recognition of magnitude of the Foremost UAS Range opportunity, the CCUVS Board of Directors determined that 2014 was a critical year to ramp-up its management and business development capacity. In 2014, Roger Haessel joined CCUVS as the Chief Executive Officer with a mandate to explore all opportunities to successfully develop the Foremost UAS Range.

UAS Sector Growth – Civil and Commercial Applications

Most of the key advancements in UAS technology have come out of military-oriented research and development activities. These developments have accelerated over the last 10 years with their extensive use in wars in Afghanistan and Iraq and various other surveillance operations. This technology is now working its way into commercial and civil applications.

The economic potential for commercial and civil UVS applications is tremendous, especially for a large and sparsely populated country such as Canada with significant resource industries and their related challenges. Among the biggest opportunities are:

Environmental monitoring with particular emphasis on oil & gas - Unmanned flight over long stretches of oil & gas pipelines using high-tech sensors to monitor for leaks. Benefits of UAS over current methodologies include:

o More frequent monitoringo Faster remediation efforts in case of problemso Improved cost effectiveness due to increased productivity over traditional

manual monitoring

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o Safer than using manned flight especially at lower altitude flight in more remote areas

o Reduced environmental footprinto See the graphic entitled “Sample of Unmanned Aircraft System for

Pipeline Inspection” earlier in this document for a visual representation of how UAS might work in this capacity

Infrastructure monitoring – UAS can be used to monitor infrastructure such as power lines and allow earlier detection and mitigation of potential problems

Forestry management – Unmanned flight can improve stewardship over Canada’s vast forest resources, including:

o Survey forest health and monitor/manage disease including Mountain Pine Beetle

o Use sensors to detect moisture content and assess risks from forest fires and pestilence

o Evaluate and fight forest fires with less risk to human life

Agriculture – UAS can increase the efficiency of Canada’s agricultural industries, through various techniques:

o Remote sensing to scan plants for health issues and detect disease outbreaks

o Recording plant growth rates and estimating yieldso More precise detection of crop moisture content would enable farmers to

optimize irrigation and potentially reduce water usageo Precision spraying of crops using UAS could reduce the use of pesticides

and optimize the application of nutrients and, thereby increase yields, reduce costs and reduce environmental impact

Wildlife Management – UAS can be used to survey animal populations and migration patterns

Public Safety – UAS can provide assistance to firefighters, emergency medical service providers and law enforcement officers.

Window of Opportunity

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Canada and CCUVS are ahead of the US which has fallen behind its own timelines to develop the civil and commercial applications related to UAS. The FAA was directed to establish 6 UAS test/training ranges by the end of 2012. That deadline was missed when the FAA notified the US government in November 2012 that they needed more time. Entering 2014, the FAA finally announced the 6 locations (University of Alaska, State of Nevada, New York’s Griffiss International Airport, North Dakota Department of Commerce, Texas A&M University at Corpus Christi, and Virginia Tech).

Canada and Alberta have an opportunity to provide leadership in the UAS sector. In 2014, CCUVS in partnership with Foremost, AB received the necessary approvals through NAV CANADA and Transport Canada to manage 700 square nautical miles (2,400 square kilometers) of restricted airspace in Southeast Alberta. This airspace is the first of its kind in North America and is specifically designated for flying UAS for the purposes of training, research and development for civil and commercial applications. This airspace gives Canada a first mover advantage for both domestic and international UAS development.

Foremost UAS Range

The Village of Foremost, Alberta is a small community located 102 kilometres west of Medicine Hat and 110 kilometres east of Lethbridge. Foremost is primarily an agricultural community with current population estimated at 500. The Foremost Airport/Aerodrome is located 2.6 kilometres west of the Village.

The Foremost Aerodrome was identified by CCUVS in 2008 as a potential site for a development and training areas for the sole purpose of operating UAS for commercial and civil purposes. This type of facility was needed to offset the difficulty civil UAS operators were experiencing in gaining access to military training ranges and airspace. Since 2008, three SFOC’s for UAS have been issued by Transport Canada for within line of sight operation at Foremost, each of which was facilitated by CCUVS.

At the request of Transport Canada in April 2012, based on a submission by CCUVS, NAV Canada began developing an Airspace Assessment (AA) to create an area of restricted airspace for flying UAS Beyond Visual Line of Sight. Upon completion of the assessment, NAV CANADA recommended creation of the airspace and Transport Canada concurred with those recommendations. On November 13, 2014 the new Restricted Airspace was published in the Canada Flight Supplement.

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The proposed Foremost UAS Range has a bright future and strong demand. With adequate support, Foremost could become a globally unique asset for UAS training, development and research. Among its many advantages:

Vast unfettered airspace Large enough for Beyond Visual Line of Sight (BVLOS) flight Flat short grass topography making it easier to retrieve UAS after flight Extended lines of sight for easier monitoring Low population density keeps risks to a minimum Good weather increases number of days available for training

Foremost is a fairly remote location and that is considered a positive attribute for UAS training since there are fewer obstacles to clean flight lines. Despite the relative remoteness of Foremost, Southeast Alberta has significant supports available to UAS companies working in the area. Medicine Hat has a population of over 61,000 residents and all the amenities of a regional service hub. In Southwest Alberta and equidistant, Lethbridge has a population of nearly 100,000 people including a University and College.

The Foremost UAS Range operates in a region served by APEX, Southeast Alberta’s Regional Innovation Network. APEX is a partnership between Medicine Hat College, Economic Development Alliance of Southeast Alberta, Government of Alberta, and Community Futures Entre-Corp. Together this network is able to provide companies with training, relocation support, community information, access to capital, business planning and other forms of assistance.

In early 2013, APEX and its partners were able to support Medicine Hat College to acquire high-end advanced manufacturing equipment including a 3D printer and laser scanner. This equipment is available for business use and would be readily accessible by UAS companies operating in the area. This technology could provide incredible benefits as UAS parts need to be redesigned or replaced.

Updated Vision and Goals of CCUVS and the Foremost Initiative

The Foremost UAS Range initiative is transformational not only to the Village of Foremost but also to CCUVS. With the undertaking of such a significant initiative as the Foremost UAS Range, it is appropriate for CCUVS to reconsider its vision and mission.

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Future Vision: Canada is the internationally recognized leader in the training, development, and commercialization of unmanned vehicle systems for commercial and civil applications.

Future Mission: Foremost/CCUVS will enable Canadian and international companies to accelerate the development and commercialization of new UAS technologies:

Provide non-military access to globally unique UAS training and development facilities

Support and develop Beyond Visual Line of Sight (BVLOS) UAS flight Leverage Foremost to prove-out UAS technologies for civil and commercial

applications including environmental monitoring

Strategic Objectives: CCUVS will transfer its assets and brand to the Village of Foremost to ensure that Canada becomes the ‘go to’ destination for civil and commercial UAS training, research and development. Foremost/CCUVS will:

Work with Transport Canada/NAV CANADA to manage the restricted airspace near Foremost, AB

Engage with industrial sectors that could benefit from embracing UAS technology in their operations

Create a compelling value proposition for industry such that the Foremost UAS Range becomes sustainable over time

Partner with Tecterra Geomatics, ACAMP and other key players in the Alberta technology and entrepreneurial ecosystem to leverage each others’ capabilities

Partner with Defence Research & Development Canada (DRDC-Suffield) to ensure that relevant and appropriate scientific research & development is available for technology transfer and commercialization

To the extent that they are willing to engage with a western Canadian partner, work to support the Unmanned Aircraft System Center of Excellence out of Alma, Quebec in their UVS testing needs due to lack of access to adequate airspace or limitations due to smaller size, more challenging geography, poorer climate, etc.

Primary Goal: Going forward, the primary goal of Foremost/CCUVS is to develop Foremost in a way that leverages the unique assets and attributes in Southeastern Alberta to make Canada the world's leading country in the research, development and commercialization of UAS technology for civil and commercial applications.

Supporting Goals: Supporting goals of Foremost/CCUVS initiative include: Develop the Foremost UAS Range of approximately 700 square nautical miles

based out of the airport in Foremost, Alberta

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Support companies to research, develop and commercialize new technologies related to UAS

Provide specialized UAS support services including operations, logistics, launch, intellectual property, regulatory approvals, and advisory services

Facilitate the introduction of new UAS related products and applications to the market

Leverage the unique attributes in the region around Foremost, Alberta including:o Vast unfettered airspaceo Flat short grass topography - extended lines of sighto Highly suitable weather (over 300 VFR days per year)o Benign EMI environment

Maintain financial sustainability over longer-term

Investment Requirement

Foremost has many of the natural requirements for a world class UAS training facility, but it does require some investment to attract clients. Many of the emerging applications for agriculture or oil and gas will be required to operate BVLOS to be effective. In general, this involves larger UAS up to and including MALE (Medium Altitude Long Endurance) sized UAS. The restricted airspace at Foremost will be sufficiently large for BVLOS testing and training. However, the supporting infrastructure is currently inadequate for operations of this type. In particular, there is a need for some basic infrastructure such as a building that includes a combined hangar and a modest office/lab complex.

The required building and related infrastructure is critical to the Foremost initiative. Due to the highly technical nature of the UAS industry, modern heated and air-conditioned buildings are generally required to attract clientele and to accommodate their needs. Without developing this additional infrastructure to complement the available airspace, it would be unreasonable to assume that companies with global presence and access would consider Foremost as a training and development option.

Numerous large OEM aerospace companies have indicated an interest in flying at the Foremost UAS Range including Lockheed Martin Canada, General Atomics, and Selex-Galileo among others. These larger companies are interested in flying at Foremost, in part, because of its proximity to them in western North America. They deem the size of the airspace sufficient for test and training flights even for UAS as large as the General Atomics Predator (i.e. figure 8 laps within the Foremost restricted airspace at Predator cruising speed will be approximately 1 hour in duration). Due to the nature of their

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business, these large OEM companies have indicated that they would require a secure hangar in order to operate at the Foremost UAS Range.

Comparative Analysis for a Unique Opportunity

An analysis of Foremost relative to competing alternatives shows that it compares very favorably in most key aspects. The following chart shows how the Foremost range compares to other non-military UAS Training & Development ranges around the world. Foremost is listed twice to show the potential competitive advantage that could be obtained with some minimal investment.

“Foremost – 2014”: The foremost Aerodrome already has been used by a number of companies for UAS training despite facility shortcomings. Currently, the big weakness in Foremost is infrastructure including lack of a dedicated hanger and lab/office space.

“Foremost – 2015”: With a relatively small investment in facilities and ramp-up, Foremost could leapfrog the global competition.

Source: Subject matter experts.

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Strengths, Weaknesses, Opportunities, and Threats

A SWOT analysis reveals that Foremost has many strengths and great opportunities. The key weakness is inadequate infrastructure and that can be addressed with a one-time investment.

Business Model

NOTE:CCUVS is currently in the process of filing necessary documents to transfer the “user agency” to the Village of Foremost.

The Foremost/CCUVS business model will focus on various revenue sources. The application for restricted airspace at Foremost stipulates that CCUVS is the responsible authority (and thereby, the sole entity) for requests to invoke the Foremost restricted

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airspace (a condition imposed by Transport Canada). TC further stipulated that CCUVS cannot charge fees for utilization of airspace. However, the primary revenue driver will be payments from companies that wish to lease the aerodrome and related infrastructure (and, thereby, use of the related airspace) for their UAS testing, training, research & development activities. For companies engaged in testing civil and commercial applications, there are few non-military substitutes to the Foremost, Alberta UAS range. Indeed, there are currently no substitutes in North America that offer Foremost’s critical attributes of size, weather, and topography.

Another revenue source is renting the launcher/catapult to companies for UAS launch. This will be a Foremost/CCUVS-owned asset that has demand from around the world. It currently commands approximately $1600/day for rent but is under-utilized. With the launch of the Foremost UAS Range, demand is likely to increase at least for certain types of large fixed-wing UAS.

Another revenue sources will include flight operations support (i.e. Safety Officer Services) and regulatory assistance (i.e. SFOC preparation for BVLOS flights). Additional potential areas for revenue include product development and commercialization advisory services, intellectual property assistance, etc.

The business model and long-term sustainability depend greatly on the number of companies that want to contract to fly at Foremost. The number of companies and their utilization rates (i.e. number of days at Foremost and number of flight days) will be the largest revenue drivers.

As companies hear about the Foremost initiative and its compelling attributes, they have been calling for more information. In addition, CCUVS has participated on trade missions to market the Range.

Risks

Speed - The biggest risk is that Canada does not move quickly to invest in Foremost and develop a first-mover advantage. The United States is struggling to integrate UAS into their National Air Space. It is simply a matter of time until the US has their regulations in place and begins to move quickly upon this opportunity. In two years, this opportunity will likely bypass Canada.

Politics - The recent announcement of funding for the Unmanned Aircraft Systems Centre of Excellence in Alma, QC has the potential to fragment the Canadian market. Alma may have regional relevance but it does not have national/global potential. Alma

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cannot match the potential of Southeastern Alberta simply due to airspace limitations, geography, topography, and climate. The Foremost range could become a national asset versus a regional one. [Note: As of the writing of this document, Alma has no permanent airspace. All flights have been coordinated in military airspace.]

Infrastructure – In order to attract the leading UAS companies to Foremost, there must be adequate infrastructure including lab/office space, power, water, secure storage for UAS, ground control station with radar, road access, adequate lighting, etc. Discussions will be held to try to accommodate this when the time comes.

Usage – The sustainability of the CCUVS/Foremost business model is based on various assumptions for both revenue and expense. Given that there are a certain number of fixed expenses, it is important that Foremost has a strong utilization rate. Given the current lack of training ranges for BVLOS UAS, the assumptions are conservative provided first-mover advantages are not lost. It is important that this initiative is seen as the “Foremost” destination for UAS training and development.

Underinvestment – It is important to emphasize that all other UAS flight range and development centres in western democracies have been recipients of government funding. For a country that could benefit the most from UAS activity, Canada lags far behind dozens of other countries in this emerging technology frontier in terms of government investment. Canadian Governments need to provide not only adequate investment but also smart investment; otherwise UAS could become a lost opportunity for Canada.

Conclusion

Foremost/CCUVS, at its current level of operations, provides valuable services to the Canadian UAS industry. Limited levels of visual line of sight UAS training and development currently takes place at Foremost using SFOCs. The status quo could be maintained for a period of time; however, this will be unacceptable over the medium to longer terms. The civil and commercial opportunities for UAS are considerable and without further investment in the Foremost/CCUVS UAS Range, a unique opportunity will pass by Canada and Canadian industry.

Now is the time to invest in the Foremost/CCUVS initiative. Following an initial investment for facilities, infrastructure and ramp-up expenses, Foremost will become financially sustainable over time.

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Foremost has many natural gifts but requires an investment commitment from Canada and Alberta. The economic opportunity is big and the time to act is now. Canada has an opportunity to assume a leadership position in the early stages of a growth industry but this opportunity will not wait for long.

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