General Electric Announces Venture to Manage Drone Traffic

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General Electric Co. (NYSE: GE) announced Thursday morning that it has created a new company called AiRXOS to provide management and control services for unmanned aircraft vehicle (UAV, aka drone) operations. The company is a wholly owned subsidiary of GE and is a joint venture of the company’s business innovations and aviation groups.

In the announcement, GE noted that AiRXOS has been chosen by the U.S. Department of Transportation to take part in three of 10 pilot programs around the country designed to help government agencies, municipalities, regional aviation authorities and private sector operators manage and meet the increasing demand for sophisticated and safe unmanned aircraft systems operations.

Kenneth Stewart, general manager of AiRXOS, said:

GE already has been using drones and drone technology for some time, what AiRXOS offers is the infrastructure and advanced operations necessary to unlock the emerging markets of autonomous flight.

Will AiRXOS turn GE’s fortunes around? Not likely. But while most of us may be thinking of drones and air taxis as a technology that is some time away, there are a number of companies both large and small that are trying to get some traction now in unmanned traffic management (UTM).

Among the bigger players are Inc. (NASDAQ: AMZN), Boeing Co. (NYSE: BA), Alphabet Inc. (NASDAQ: GOOGL) and GE. A startup by the name of Airmap has teamed up with Swiss air traffic control supplier Skyguide to implement a UTM program in Switzerland that is scheduled to go live this month.

GE projects that the United States will account for nearly 80% of the UTM market and that the compound annual growth rate between 2015 and 2018 will be 25.5%.

The Federal Aviation Administration (FAA) has estimated that the hobbyist drone fleet will triple in size by 2021 to 3.5 million units. The commercial fleet is expected to grow even faster: by 2021 the FAA projects a commercial fleet of 442,000 drones, a 10.5X increase. The number of drone pilots is forecast to a factor of 10 to 20 in the same period.

GE stock traded down about 0.3% in Thursday’s premarket, at $13.61 in a 52-week range of $12.73 to $29.47. The stock’s 12-month consensus price target is $17.50.

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