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Today, Unmanned Air Vehicle (UAV) use has been a key trend though various armies in the world. Starting from the late 90’s, UAV market has become a strategic area where states increased their resources within their defense expenditures. Parallel to their growing capabilities, UAVs are reshaping the elements of military air superiority, as it shall be seen in the recent NATO missions.

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  1. 1. THE FUTURE OF THE CIVIL AND MILITARY UAV MARKETToday, Unmanned Air Vehicle (UAV) use has been a key trend though various armies in theworld. Starting from the late 90’s, UAV market has become a strategic area where statesincreased their resources within their defense expenditures. Parallel to their growingcapabilities, UAVs are reshaping the elements of military air superiority, as it shall be seen inthe recent NATO missions. The most important factor in the requirement for UAVs is, theircapability to engage an enemy with minimum casualties and civil collateral damage. The success ofUAVs in providing real-time information to military commanders has contributed to bothmission effectiveness and in protecting personnel. Also, on the contrary of manned air vehicles inmost cases, their design and specifics can be shaped more effective in accordance with theneeds of the customer. UAV’s effectiveness in these roles has encouraged most advancedmilitaries to fully commit to the use of them and this will drive rapid market growth duringthe next ten years.Figure 1: Expected Military UAV Revenues – EuropeTurkey: A major player in the UAV segment?Parallel to other Major defence actors in the world, Turkey has been interested in UAVsystems since the beginning of 1990’s as Turkish Armed Forces(TAF) were searching newmeasures to apply in their missions against separatist terrorism. In 2004, a two stage UAVpolicy was adopted by the Defence Industry Executive Committee. As to meet the urgentneeds of Turkish Armed Forces, a direct procurement model from foreign suppliers within thecooperation of local firms, has been employed. Ten Heron and three Aerostar aircrafts wereacquired within this context. However, the procurement process has been complicatedbecause limited to an altitude of 21,000 feet in tests, instead of the desired 30,000 feet, Heronsfailed to meet the specifications of the contract.For the second stage, a long term domestic designed R&D project was launched. Within theseresearch and development projects, Turkey quickly gained the capability to develop mini UAV’s shortafter. Turkey has now reached more than 160 mini UAVs which are successfully used in operationalbasis against terrorism. Moreover, tactical class prototypes are designed. However, the most importantstep in Turkish domestic UAV project is ANKA, Turkish Indigenous MALE (Medium Altitude 1
  2. 2. Long Endurance) UAV produced by TAI, which is objected to reach superior performanceresults compared to its rivals. ANKA has a 17 m. wingspan, 155 HP diesel engine with a 24hours endurance capability and a 200 kg of payload weight. Anka also operates with 2cameras at 30.000 ft. and can conduct day and night ISR (Intelligence, Surveillance,Reconnaissance) in all weather conditions. TAF has ordered 10 vehicles which are planned tobe delivered in late 2012.Like every other high tech defense system, there are limited players in the MALE UAV market. Thespeed of development and growth of UAV use has been uneven across global regions with USand Israel still very much leading the way. Experience of using mature UAV systems onoperational deployment has dramatically improved the understanding of the usefulness ofUAVs. This is driving a steady growth rate across the military segment. However, in thescope of USA’s export policies and EU regulations, there are important restraints in themarket for the UAV demanding countries. Thus the operational efficiency and performanceresults of Anka project, can be a decisive factor which can lead Turkey as a major actor in theUAV segment in the future. Considering its historical ties and unique geopolitical status, therewill be great opportunities and drivers for Turkish players in the regional markets especiallyin Middle East.Emerging UAV Requirements in Middle East.Lessons from the past wars in the region, have taught states how Air Superiority underpinnedby total situational awareness acts as the ultimate deterrence. This has convinced them that theonly way to safeguard national security is to invest in cutting edge air assets. The Middle Eastresurge in defence spending is a new phenomenon that came with the dramatic growth ineconomy since 2005, driven by the rise in the oil and gas price.Key Market CharacteristicsFor this market insight piece, we have considered the Gulf Cooperation Council (GCC)countries comprising Saudi Arabia, United Arab Emirates (UAE), Qatar, Kuwait, Oman andBahrain. This is because of the fact that these markets are homogenous and also for the factthat these markets are set to present most opportunities in the regional military air market, atleast until 2020.Up to date, Middle East defence acquisition strategy is influenced and shaped by themembers of the ruling royal family in respective countries, and institutional power thoughgrowing, still comes second in the most procurement decisions. Political clout of a countryof origin influences procurement decision as much as the credibility of a company. This isparticularly a dampener for the European companies against the US counterparts; most newair platforms are being procured from the US under Foreign Military Sales (FMS) for geo-political reasons. But at times the governments tend to balance the relationship throughsourcing from elsewhere, to Europe and Russia.The GCC countries are moving towards integration of all platforms including air platforms,air defence and homeland security under the “Peninsular Shield” initiative, though the pace ofprogress has been slow. The US and European arms regulations (such as ITAR in US, End-user monitoring clauses, etc) often restrain export of sensitive defence technology and skill tothe Middle East (except for Israel). 2
  3. 3. The market has total $62.90 billion forecasted revenue projected between 2010 and 2020.Saudi Arabia is by far the largest military air market studied. Almost a half the total marketrevenue is expected from this market alone over 2010-2020. UAE is a notable growth market;significant opportunities emerging on all segments of the market, as it continue to rebuild ondefence capabilities (increasingly at the centre of UAE military thinking). In Oman the largedefence deals are coming through only recently due to recent economic buoyancy. Qatarmilitary air market is also poised to grow robustly, underpinned by dramatic growth ondefence budget over the study period.Unmanned Air Systems in Middle East.As part of its technology acquisition strategy, the UAE has invested in development of theAustrianSchiebel rotary Camcopter S-100. The project has been co-ordinated within the UAE‘UAV Research and Technology Centre’. Schiebel has recently teamed with Boeing in orderto market the S-100, which has begun to attract the attention of the German, US and Francemilitary. Given the interest in C3I capability that a UAS can deliver, it is expected that theUAE will be keen to acquire a range of platforms with varying capabilities, along withrelevant training and support. It is also seeking to advance its own technologies and servicesin this area through Abu Dhabi Autonomous Systems. 3
  4. 4. The U.S. State Department has recently approved export version of ISR-only UAS tocountries beyond the NATO bloc. That would allow sales in the Middle East and elsewhere togovernments previously ineligible to buy the planes. General Atomics see the potential forsales of as many as 100 units in the Middle East and Pakistan of the Predator XP model (ISRonly MQ-1), which is already approved for export. In the region, UAE is fronting indeveloping indigenous version in the Middle East. A few countries such as UAE and SaudiArabia, among others use tactical UAVs and keen on acquiring MALE UAVs. But the bottomline is UAS are still untapped potential in the Middle East; future procurement would see allround competition between regional and global companies which is an important opportunityfor Turkish players.The Future of the Civil UAV Market:Over the last decade, UAV manufacturers have moved beyond pure military sales and haveshown a significant amount of interest in potential UAV applications in civil and commercialmarkets. In line with the prevailing trends across the defence sector, the military has acted asa first adopter of UAV systems and has demonstrated their utility, encouraging the idea oftheir use in a large number of non-military applications ranging from law enforcement andborder security to earth observation and communications. It is fairly clear that the marketpotential on the civil side is considerably larger than the military sector in the long term. Thisis another key factor UAV suppliers shall concentrate for the future investments.However, at the moment there are major constraints in the civil market: absence of legislationand regulations for safe flight in integrated airspace; dispersed and highly heterogeneouspotential customer base; Both the legislators and industry are striving towards a goal ofachieving a capability that would allow UAVs to operate at an Equivalent Level of Safety tomanned aircraft. Until this goal is reached UAVs are required to fly either with a specialmilitary or an ad-hoc Civil Aviation Authority exemption, or in segregated airspace. At themoment, rules vary from one country to another, an incoherence which makes things moredifficult for manufacturers and operators alike.At some point in the future, eventually UAV’s may eliminate or reduce conventional mannedair vehicles. Even if, they don’t entirely substitute, UAV’s may still have the chance of changingthe course of aviation history in the next 20-30 years with their developing capabilities and wideningarea of usage. 4