Drone Talk: In Conversation with Michael Huerta, former FAA Chief and Macquarie Senior Advisor
Throughout his career, Michael Huerta has played an incredibly significant role in shaping American infrastructure. After serving as the Commissioner of New York City’s Department of Ports and the Executive Director of the Port of San Francisco in the 80s and 90s, he held senior positions in the US Department of Transportation under President Clinton. In 2002, he helped prepare Salt Lake City’s transportation outlets for the Olympic Games, and ensured the torch made its way safely from Athens, Greece.
Most recently, he served a five-year term as the Administrator of the Federal Aviation Administration under President Obama: responsible for the safety and efficiency of the largest aerospace system in the world. He is currently a Senior Advisor at Macquarie Capital, bringing his deep operational experience and industry relationships to the firm.
We sat down with the longtime infrastructure expert and policy maker in New York City to discuss experimentation, regulation and the future of drone technology.
The culture clash: When Silicon Valley startups meet legacy aviation leaders
Due in large part to regulation, the infrastructure industry has historically been slow to embrace change. We began our conversation with Huerta by exploring what needs to happen to support the next generation of drone technology, and what could possibly hold it back.
He explained that unlike the technology industry, which is driven by innovation and experimentation, the aviation sector is one that is largely defined by caution. “The entire focus of the FAA is safety,” Huerta said. Reconciling a culture or safety and a culture committed to breaking the rules can be challenging — especially when setbacks happen, calling the readiness of emerging technologies into question. Perhaps nothing speaks to this as much as the recent fatality in Tempe, Arizona, where a woman was struck by a self-driving car while crossing the street.
Regardless, industry leaders know that they need to venture into the unknown to stay ahead. With Boeing’s recent investment in Aurora Flight Sciences and Airbus’s recent investment in Blade, it’s clear that the incumbents are looking for ways to embrace disruption. According to McKinsey, startups have raised more than $3 billion in funding to explore drone technology.
“The drone has been talked about as an innovation that’s as significant as the jet engine,” Huerta said. “I’d argue that it’s even bigger because it’s reshaping the cost profile of aviation. We can talk about using a drone in ways you’d never use an airplane, totally expanding aviation and aerospace. Companies like Boeing see their market growing bigger and they don’t want to be left behind.”
The opportunity: Building a next-generation fleet for inspection and protection
As part of the Macquarie Capital Venture Studio, we’re particularly interested in the ways in which drones can help inspect, protect and secure our country’s most critical assets, from roads to pipes. Huerta explained that while drone technology has endless applications, from photography to recreation to transportation, the inspection use case is one that has been relatively easy for people to wrap their heads around.
“How do we secure critical infrastructure and how can drones augment and contribute to that security?” Huerta asked, explaining that drones can play a powerful role in the surveying of assets like train tracks. “Currently, inspecting a track manually can be slow, dangerous, and inconvenient, since the audit needs to be scheduled around when the train is riding the tracks.” Moreover, drones have the potential to inspect beyond the visual line of sight, making the entire operation lower risk.
Drones also allow us to use physical inspection resources much more effectively, identifying the areas that humans should direct their attention to. It’s not a case of technology replacing workers and their jobs, but helping them work smarter and safer, he explained.
The FAA estimates that industrial inspection makes up 28% of all commercial drone missions today: the largest use case for the technology after aerial photography. As drones make asset inspection cheaper, faster, and safer, we can expect utilities and other large asset operators to play a key role in the development of the industry.
The challenge: How to get the public comfortable with new players in the sky
According to McKinsey, there are five factors influencing the future of the industry. The first, and perhaps the most vital, is public acceptance.
“Society forms their opinions around technologies quite quickly,” Huerta explains, referring to those that have met drone technology with apprehension or disdain. He recalled a scenario in which California Senator Dianne Feinstein opened her blinds in San Francisco to find a drone buzzing outside of her window, sent there by protestors who wanted to catch her off guard. When these things happen, he said, the public starts to think “Oh, drones are being used to record people.”
Indeed, drones have been enthusiastically adopted by people and organizations looking to capture content: real estate agents looking to snap different angles of a home, news organizations who want to film without being on the ground, and photographers who see the technology as an opportunity to broaden their perspective. A majority of these drones (and their operators) are innocent, yet the lack of a streamlined identification process has made it difficult for law enforcement and civic governments to get comfortable with their presence.
“If I’m a cop and I see a drone flying over a beach, I see that as a significant threat,” Huerta said. “People are thinking about ways to address this using identification technology. You should be able to identify any drone the same way you can identify an aircraft. That way, it’s easy to know who, or what, is an outlier.”
“The utopian promise of technological progress is giving way to the very thorny challenges of balancing innovation with social accountability,” writes Axios’ Kim Hart. “That means… a lot more skepticism about the promise of the tech-driven changes that are transforming our lives.”
The solution, Huerta suggests, is education — especially as commercial drone usages continues to increase. (The FAA predicts the number of commercial drones to more than quadruple in the next four years, from 110,606 in 2017 to 451,800 by 2022.)
Companies need to talk about drones as a public health service and a public safety service,” he said. “Yes, they can be about taking photos and Amazon dropping a package off on your doorstep. But people can debate that [necessity], while nobody’s going to debate the value of drones improving our lives and our safety. This is how public acceptance is garnered.”
Looking ahead: Data, regulation, and setting new standards for safety
Beyond the piece of drone hardware and the software that powers it, drones are major collectors of data.
“On the commercial side of the equation, the gathering of data is safer because the company collecting the data is likely the company controlling the asset,” Huerta said. “The question is, where else does this data go?” Historically, the aviation industry has supported the sharing of data among organizations with the goal of fostering greater safety. Whether that changes with the proliferation of drone technology still remains to be seen.
Another big unknown revolves around regulation, Huerta explains, using drone taxis to illustrate a point about policy. “Right now, we have a very low tolerance for aviation being unsafe,” he said. “Compare that to us allowing between 30,000 and 40,000 people to die on our nation’s highways every year.” If drone taxis are ultimately replacing highway traffic, will we hold them to the standard that we hold aircrafts to, or will we be comfortable with something less?
“Regulators don’t sit in a windowless room,” he said. “They respond to societal pressure. So we’ll need to wait and see how people react to things.” In the meantime, he adds, the companies that focus on not building not just their product, but establishing responsible data policies, are the ones who will succeed.
Beyond regulators, the future of drones is also a big question mark for civic leaders who see their constituencies embracing new technologies. According to Bloomberg, there were about 320,000 planes in active use around the world in 2015, compared with 4.5 million drones. “If you own a drone, your front porch has effectively become an airport,” Huerta said. “So if I’m a mayor, what does that mean for me and my responsibilities?”
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Drone technology is a key focus of the Macquarie Capital Venture studio with R/GA: a platform designed to promote innovations in InfraTech, with a focus on companies that have the potential to accelerate industries including utilities, transportation and environmental services. For more information or to apply, visit www.macquariecapitalventurestudio.com.
