Amazon Drone Flights Seen Grounded by Expected U.S. Rules

Dec. 2 (Bloomberg) -- Bloomberg Businessweek's Brad Stone discusses Amazon's aerial strategy with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Less than 24 hours after Jeff Bezos floated the idea of delivering packages via airborne drones, the notion was met with resistance from regulators and skepticism in the shipping industry.

The Federal Aviation Administration said yesterday it doesn’t allow any commercial unmanned flights now, and judging by guidelines sketched as recently as Nov. 7, it won’t allow the robotic trips envisioned by Bezos. United Parcel Service Inc., the largest shipping company, said it too has met with drone vendors and for now is content to stick to terra firma.

Bezos’s vision of selling books on a nascent Internet turned Amazon.com Inc. into the world’s largest online retailer, and his resulting $35.4 billion fortune has let him pursue other big ideas, such as space flight. While he showed in a Dec. 1 television interview that Amazon’s prototype “octocopter” is able to deliver a small package, regulators have yet to be convinced the world is ready for robots with eight whirring propellers to drop in on suburban driveways.

“It’s unclear whether those commercial purposes will be allowed,” said Ben Gielow, general counsel of the Association for Unmanned Vehicles Systems International, an Arlington, Virginia-based trade group. The association is urging the FAA to open the door to broader drone use, as long as it’s safe.

This undated image provided by Amazon.com shows the so-called Prime Air unmanned aircraft project that Amazon is working on in its research and development labs. Photograph by Amazon via AP Images Close

This undated image provided by Amazon.com shows the so-called Prime Air unmanned... Read More

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This undated image provided by Amazon.com shows the so-called Prime Air unmanned aircraft project that Amazon is working on in its research and development labs. Photograph by Amazon via AP Images

Developing Drone Rules

Bezos’s plan touches on a goal that UPS and rival FedEx Corp. have long studied -- a way to deliver products to consumers the same day they’re ordered. Atlanta-based UPS has concluded the demand for now is too small to overcome cost and technical challenges, Chief Sales and Marketing Officer Alan Gershenhorn said in an interview yesterday.

‘Niche Offering’

Technologies enabling use of small drones “are pretty far off,” said Gershenhorn, who added that UPS has heard the pitch from dronemakers and doesn’t anticipate using unmanned aircraft anytime soon. “Demand for same-day use is a niche offering.”

The drones envisioned by Amazon would be programmed with GPS coordinates that let them fly directly to a customer’s door, dropping off books, food and other small goods, according to Bezos and a company video posted on Google Inc.’s YouTube.

In his Dec. 1 interview with Charlie Rose on CBS’s “60 Minutes,” Bezos said Amazon’s multirotor devices may be ready in four or five years. The company is waiting for the FAA to set rules for the devices, he said. While Congress required the FAA to create rules allowing civilian drones to take flight by 2015, FAA Administrator Michael Huerta said last month that full integration may take longer.

Amazon has already reached out to the aviation regulation agency, Mary Osako, a company spokeswoman, said in an e-mail.

Related: Amazon Testing Drones for Same-Day Package Delivery

Autonomous drone operations are “not currently allowed in the United States,” the FAA said yesterday in an e-mailed statement. The agency didn’t comment directly on Amazon.

FAA Rules

The FAA released a document on Nov. 7 outlining its plans to start integrating drone-type vehicles into the nation’s airways. Even so, the report specifically bars operation of unmanned aircraft that use a computerized flight path instead of being controlled by a person.

Small drones like the one demonstrated by Bezos are expected to have separate rules requiring they be flown within sight of an operator and only in unpopulated areas, said Gielow, the official from the unmanned vehicles trade group.

It may take a decade for the FAA and the unmanned aircraft industry to craft workable rules that ensure the safety and reliability of autonomous drones that deliver pizza and books, said John Hansman, an aeronautics professor at the Massachusetts Institute of Technology who has studied drones.

High Costs

In the early stages of such delivery systems, costs will be so high that drones will only be practical for tasks such as dispatching emergency medical supplies, Hansman said.

“You have to have appropriate controls,” he said.

Amazon said it’s working on a variety of models, including some that may be able to meet FAA requirements.

“The model featured on ‘60 Minutes’ is autonomous but we have developed several prototypes in our lab,” Osako said. When asked if that meant Amazon planned to have a pilot for each drone, Osako said the company “will comply with FAA regulations.”

Amazon wants the vehicles to be capable of delivering packages weighing as much as 5 pounds (2.3 kilograms) within a 10-mile (16-kilometer) radius, Bezos said.

Memphis, Tennessee-based FedEx, operator of the biggest cargo airline, estimates revenue from intracity delivery of small packages in the U.S. may total as much as $12 billion.

With no immediate prospect of reaching customers via drones, Amazon’s push to speed deliveries from regional distribution centers probably leads to the same path taken by other shipping-dependent businesses: putting packages on the road.

Earlier Missteps

Amazon’s forays into such fast-shipping methods haven’t always ended well. The retailer put up more than $60 million for a 32 percent stake in Kozmo.com Inc., once the largest fast-delivery service for videos, food and other purchases bought online. In 2001, New York-based Kozmo folded and fired all 1,100 employees.

Brick-and-mortar retailers these days often rely on fleet vehicles, either wholly owned or handled under contract by a logistics provider. Other ground-based options for same-day delivery include the use of for-hire courier services, a field traditionally populated by business-to-business shippers serving customers such as health-care providers and lawyers.

While a FedEx spokeswoman declined to comment directly about the Amazon technology, an executive said the shipper is always looking for ways to do things better.

Seeking Innovation

“We have made a name for ourselves in innovation and technology,” Senior Vice President Patrick Fitzgerald said yesterday in a Bloomberg Television interview. “This is something we have a lot of focus on. As it stands today, there are no drones in the delivery network.”

Even though the technology that would allow a mass-delivery system isn’t ready yet, it is advancing, Benjamin Trapnell, an aeronautics professor at the University of North Dakota in Grand Forks, said in an interview.

“The devil is in the details,” Trapnell said. A automated drone-delivery system like the one Bezos is proposing must not only be capable of navigating with the accuracy of a few feet, it also must have sensors to avoid trees, buildings and people.

“I know there are going to be major hurdles,” Trapnell said. “There are going to be major setbacks. But I don’t think this technology is going to be denied.”

To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Ed Dufner at edufner@bloomberg.net

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