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Amazon drone delivery is still ‘a couple years out,’ drone CEO says

Grete Suarez
Producer

The sky seemed to be the limit for Amazon (AMZN) when its executive Jeff Wilke said he expects to start “delivering packages via drone to customers within months.”

But one logistics CEO says not so fast.

“Based on our analysis, they’re probably a couple years out before we can see a commercial operation that will be the type of scale that Amazon would like to see,” said Andreas Raptopoulos, Founder and CEO of Matternet, on YFi PM.

The e-commerce giant has cleared one regulatory hurdle after receiving a special certificate of airworthiness from the Federal Aviation Administration, but that’s only the beginning.

“What Amazon has announced last week is that they are getting a special airworthiness certificate for one of their aircraft [drone], but they haven’t yet announced what they’re doing on the operation side,” said Raptopoulos.

That is a step behind Alphabet’s Wing, which has already won FAA approval to drone deliver goods from local businesses to homes in Virginia.

Regulatory hurdles

Back in December 2013, Jeff Bezos announced on “60 Minutes” that Amazon would be flying delivery drones to customers within five years. Regulatory hurdles have piled and the deadline has since passed.

“You have 2 things to make it work: you need a vehicle that’s certified to fly or integrate safely into the airspace. And you need what is called Part 135, authorization in order to operate a UAS airline,” Raptopoulos said.

Amazon Founder and CEO Jeff Bezos addresses the audience during a keynote session at the Amazon Re:MARS conference on robotics and artificial intelligence at the Aria Hotel in Las Vegas, Nevada on June 6, 2019. (MARK RALSTON/AFP/Getty Images)

Raptopoulos’ company Matternet is a drone startup that has been drone-delivering packages in Switzerland since late 2017. Despite the experience in another country, they only began FAA sanctioned commercial deliveries in March this year.

In partnership with UPS, Matternet drones deliver medical samples via self-piloting drones at WakeMed’s hospital and campus in North Carolina.

But the process of getting their drones commercially viable is not a quick process. According to Washington, D.C.-based law firm Steptoe & Johnson, the typical processing time for the certification is over two years.

Surpassing the regulatory hurdle, “[Matternet] is the first ongoing revenue generating drone delivery operation in the U.S.,” Raptopoulos said.

Scaling the drone delivery business

Real estate can be lucrative in high traffic areas like big cities such as New York City or San Francisco, but the race for airspace is a different animal.

“In order to make it scale, we’ll need to integrate safely in the national airspace system. For that, there is an infrastructure that needs to be put in place, digital infrastructure,” Raptopoulos said.

Matternet and UPS partners to deliver medical samples via unmanned drones at WakeMed’s hospital in Raleigh, N.C. (Credit: UPS, Matternet)

NASA estimates about 700,000 drones are expected to fill the skies by the year 2020. In order to tackle the problem, the space agency set out a research platform to manage drones flying at low-altitude so that it won’t interfere with helicopters, nearby airports, and safety drones used to save lives.

To Raptopoulos, this study is key to make the drone delivery space scale.

“This component called the ‘unmanned aerial system traffic management’ is important to make this space scale. So how do we integrate safely with the airspace, is really the challenge that’s going to set the base to scale,” he said.

NASA’s final study expected to be delivered to the FAA for implementation some time after it concludes the study in August 2019.

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Grete Suarez is producer at Yahoo Finance for YFi PM and The Ticker. Follow her on Twitter: @GreteSuarez

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