The Federal Aviation Administration (FAA) granted approval for UPS to become the first-ever drone service operating as a commercial airline, according to Wired. While its drones will only be allowed to operate in suburban and rural regions, UPS said the FAA approval “has no limits on the size or scope of operations.” The approval marks a dramatic shift in the regulatory landscape: It was only within the last year that researchers conducted the first FAA-approved, beyond-line-of-sight drone flight.
UPS now has the go-ahead to quickly expand drone operations, which has the potential to augment core operations. UPS CEO David Abney said the company will leverage the FAA approval to expand operations to “dozens and dozens” of campus-like environments, building on the success of its service conducting 25-mile deliveries between North Carolina medical facilities. At the same time, UPS has been significantly investing in infrastructure to build out drone-based package delivery.
Abney said this would include the aircraft fleet and “a ground-based fleet of drones that have detect and avoid technologies…and then a consolidated control center that will allow us to dispatch and operate these drones.” He clarified that this would supplement the human package delivery drivers. Altogether, this is clearly an effort to gain an operational advantage in the last-mile market, which is projected to reach $51 billion in North America by 2022, according to Technavio.
Competitors in the drone delivery space will likely have mixed feelings regarding UPS’s FAA approval, as it signals a more liberal regulatory era, but also grants UPS an indefinite competitive advantage. Amazon, Alphabet, FedEx, and others have allocatedsignificant capital to drone delivery research. The FAA approval could be a sign that the FAA is willing to allow broader delivery operations. But because UPS was given permission before the rest of the field — which it credits to working with the FAA on airline operations — it now has the opportunity to build operational expertise ahead of the pack.
UPS will undoubtedly attempt to parlay this into a long-term advantage. It could, for instance, leverage the license to attract strong startup collaborators in the space, building on existingpartnerships with the likes of Matternet. It could also begin to test in a wider range of environmental conditions, conducting flights at night or in inclement weather. UPS will need to work quickly, however, as competitors are no doubt scrambling to gain the same permissions.
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