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Central planning leads to bloated bureaucratic processes, corruption and poor outcomes, often for the most politically underrepresented. It fails because it cannot make use of decentralized knowledge the way markets do.
States By State Growth Opportunities
Most states allow local authorities to lease airspace above public roads and public property. A good example from Oregon:
Any political subdivision holding the easement or fee title to a street or highway may lease the space above or below that street or highway for private purposes.
It must be noted flying drones above public roads only (not private airspace) will add 40% to the costs of drone delivery, meaning private airspace above homes and businesses is required for commercial drone operations to be successful.
The Ohio Department of Transportation (ODOT) has launched a low-altitude Unmanned Traffic Management (UTM) navigation system. Ohio is bullish on drones. Ohio is one of the first states to establish a permanent UTM system for statewide use.
The FAA will get a common set of data artefacts, safety approaches and procedures based on the Ohio implementation. No community wants drones knocking into each other as they transit through private airspace.
The drone navigation technology works as a peer-to-peer model, allowing agencies like ODOT to use its capabilities to prevent traffic incidents during emergency response missions or when surveying infrastructure after a natural disaster and other use cases.
The ODOT mainly uses the system to broadcast its flight information and monitor the health and integrity of the fleet as well as the impact on operators’ routes. As more operators begin sharing data this will become part of the ecosystem that helps safely scale drone operations in Ohio.
Unlike FAA-regulated passenger and private aircraft, a centralised organisation doesn’t manage and provide deconfliction services for drones at low altitudes. These drones need to fly below 400 ft to comply with FAA guidelines. They generally cruise at ~150 ft as this is the most economical for energy consumption.
The need for the ecosystem to gather the aggregated permission to be in private real estate owners’ airspace is integral to making Ohio’s ambitions a reality.
As overall low-altitude airspace systems evolve we will see advanced air mobility for cargo operations, air taxis and regional transportation as well as drones delivering medicine, food and other packages. Ohio is set to capture significant value from its forward-thinking position.
In the majority of States in the United States drones and flying cars are being seen as a way to boost economic growth, connect communities and reduce road congestion. I will not list all States and their commitment to this industry and the continued protection of property rights but I will give a flavour of some below and more in other newsletters to follow.
North Dakota
The Northern Plains program and Unmanned Aerial Systems (UAS) test site has received over $50 million in funding since it launched in 2019. The North Dakota Department of Commerce, Office of the Adjunct General of the National Guard, the University of North Dakota and state organizations delivered funding. The funding supports Unmanned Aerial Vehicle applications.
North Carolina
The North Carolina Department of Transportation (NCDOT) is part of the BEYOND initiative. This initiative seeks to address the challenges faced integrating drones by Utilizing Beyond Visual Line of Sight (BVLOS) operations that are repeatable, scalable and economically viable with attention given to infrastructure inspection, public operations and small package delivery.
They will leverage industry operations to analyze and quantify the societal and economic benefits of drone and flying car operations.
A key focus, with all States, is focusing on community engagement. Private air rights owners play the most pivotal role in the ecosystem, without their permission drones and flying cars are grounded.
Florida Flying Cars
Orlando’s Lake Nona community will be the first site for one of 10 vertiports expected to launch services in 2025. Vertiports are used for electrical Verticle Take Off and Landing (eVTOL) vehicles, similar to how helipads are used for helicopters. The Lake Nona vertiport will cost $25 million and cover 56,000 square feet. Most of Florida’s population (22 million people) will live within 30 minutes of one of these vertiports, and further demand for flights is expected from visitors to the state, which total more than 125 million annually. The eVTOLs transit through private airspace and require permission to do so.
Arkansas
Arkansas announced the creation of the Arkansas Council on Future Mobility, an advisory board tasked with helping Arkansas serve as a hub for next-generation advanced air mobility. Governor Asa Hutchinson tasked the committee to review design programs to adopt these technologies, secure federal funding and establish education and workforce initiatives that can create jobs in the state. Twenty per cent of Arkansas’ exports are already part of the aviation and aerospace supply chains and they intend to grow that by leaning into the future of low-altitude air mobility.
The Money Flows
This is only a small sample of what States are doing, Utah for example has set about developing the industry and a $300M development plan is in train. A major element of the development of the industry is the return on investment for the States.
States are looking at fees and taxes as the industry accelerates. These will be for various services and facilities. Many will be a carbon copy of current airport-type fees and others will be new and usage-based.
Landing fees for commercial eVTOLs can model commercial aircraft if needed and can be either per-landing fees or based on gross landing weight. Per-landing fees are straightforward flat fees, while weight-based fees are calculated using a formula based on the aircraft's maximum landing weight. However, weight-based fees may not be as relevant for drones and flying cars. They will land much of the time on private real estate and that charge will be up to the private land owner to set in the marketplace.
Depending on the State, aircraft registration fees may be based on the aircraft's wholesale value. The likely way forward is to revise this to implement registration fees for commercial drones in various categories.
Air rights fees that private air rights owners charge for the use of their airspace may have a small transaction tax on it. As drone transit becomes a large slice of last-mile delivery and frequency increases these taxes will grow the size of the pie for the States. Drones are an order of magnitude more economical than road-based delivery so it’s be a win-win.
It is clear that drones, low-altitude air rights and flying cars will play a significant role in the economy's growth. This is no longer a thing of science fiction, it is a reality and the unlock is with the decentralized air rights holders.