The estimated value of regional passenger transport by drones over the next 25 years is $1.4 billion - and the Government plans to regulate it.
Transport Minister Phil Twyford unveiled the Government's Drone Integration Paper on Wednesday which outlines how drones could be integrated into the aviation sector.
That would require drone operators to pay their share of the costs of ensuring an "integrated, safe, sustainable and responsive" aviation and transport system, the paper says.
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"If regular freight deliveries with drones and Urban Air Mobility services are to become a reality, we will need to consider issues such as infrastructure requirements, and the appropriate licensing system for operators."
Like piloted aircraft, it says there may be constraints on where drones can operate, for example, having segregated flight paths or designated no fly zones.
New Zealand's current regulatory framework for drone operations - under the Civil Aviation Act - is considered flexible. With the "likely growth" in medium and large drones for passenger transport, the paper says Civil Aviation Rules need to be reviewed.
Drones have the potential to deliver "economic benefits" to New Zealand, according to Twyford. He said in a statement that they're estimated to be worth up to $7.9 billion to the economy.
They could deliver economic benefits by undertaking tasks that are time intensive such as monitoring stock and crops, conducting expensive power line inspections, and helping with risky emergency services.
"New Zealand has an opportunity to be at the forefront of drone technology with sectors like forestry, agriculture, and conservation already harnessing their abilities," Twyford said.
"An example of the innovation that's already underway is Zephyr Airworks, who have partnered with Air New Zealand to test and develop its self-piloted, electric air taxi here in New Zealand."
The prototype being tested in the South Island, known as Cora, is a small electric aircraft capable of vertical take-off like a helicopter. It uses three on-board computers to calculate flight paths and it can carry up to two passengers.
The Civil Aviation Authority (CAA) is said to have given the project - spearheaded by Google co-founder Larry Page - an experimental airworthiness certificate. Trialling the flying taxi service will take up to six years.
Ride-sharing company Uber is also planning for passenger drones. It's working with Boeing to manufacture small aircraft, which it plans to trial in Auckland, alongside Sydney and Melbourne, as soon as 2020.
The challenges with drones
Drones are already being used as an inspection and surveying tool in a wide range of sectors in New Zealand. But there are challenges around safety, security (physical and cyber), privacy and enforcement.
"Of particular importance is national security as drones can be used to conduct illegal activity (noting that not all illegal acts are a threat to national security)," the paper says.
Twyford said the Ministry of Transport is currently consulting on potential new powers for law enforcement agencies to seize or detain drones that are breaking the rules.
"Safety is our top transport priority and there are a number of initiatives already underway, including looking at potential updates to the rules for using drones."
In 2017, there were approximately 77,600 drones in New Zealand, according to the Drone Benefit Study by Market Economic Limited. By comparison, there are estimated to be 5000 piloted aircraft in operation.
In April 2019, there were 104 drone operators certified by the CAA to conduct operations outside of standard parameters.
The Government predicts drone use in New Zealand may undergo comparable levels of growth to the US, where the US Federal Authority predicts commercial drone use will increase by a factor of 10 between 2016 and 2021.