FedEx, Alphabet and Uber Win Drone Sweepstakes Lost by Amazon

(Bloomberg) -- At Memphis International Airport, drones may soon be inspecting planes and delivering airplane parts for FedEx Corp. In Reno, Nevada, they will test airlifting life-saving defibrillators to patients. And customers in Virginia could get goods they ordered from Alphabet Inc.’s flying devices.

A who’s who of technology and aviation companies won U.S. approval Wednesday to push the edge of the envelope in drone flights, from testing people’s tolerance for delivery devices hovering over their rooftops to ensuring farmers’ drones won’t hit crop dusters.

In the most far-reaching test program to date for burgeoning drone commerce, the Department of Transportation announced the selection of 10 state, local and tribal governments -- in partnership with companies that include Intel Corp., Uber Technologies Inc. and Qualcomm Inc. -- as social and scientific test areas.

"The enthusiastic response to our request for applications demonstrated the many innovative technological and operational solutions already on the horizon," Transportation Secretary Elaine Chao said.

The governments hosting the pilot projects are San Diego; North Carolina; Topeka, Kansas; Reno; Fairbanks, Alaska; the Choctaw Nation in Oklahoma; Virginia; North Dakota; Memphis; and Lee County Mosquito Control District in Florida. In one of the more unusual proposals, Lee County wants to use a 1,500-pound (680-kilo) drone to control the airborne pests.

The program was pushed by President Donald Trump’s White House as a way to speed approvals of more far-ranging unmanned flight operations.

Ambitions Take Flight

The Integration Pilot Program, as it’s called, has created palpable enthusiasm in the drone world, from startups including Flirtey Inc. and AirMap Inc. to established companies developing unmanned devices like Amazon.com Inc., which wants to deliver packages to people’s homes.

Flirtey, which has tested a variety of ways to deliver goods using small drones, is part of a test program operated by Reno, along with three other program winners. Drones carrying defibrillators to heart attack victims have the potential to save many lives, said Matthew Sweeny, Flirtey’s chief executive officer and founder.

The unmanned devices will be used for multiple purposes in Memphis, said Scott Brockman, president of Memphis-Shelby County Airport Authority. Among them will be to inspect hard-to-reach infrastructure and to inspect runways to ensure they are clear of debris. Memphis International is the hub for operations by FedEx, which is a partner in the program.

Fedex, units of General Electric Co. and Intel are participating in a team led by the Memphis airport that proposes flying beyond line of sight, at night and over people. They will deliver small aircraft parts in a designated area of the airport, inspect aircraft and provide emergency response, according to an airport statement.

In Virginia, drones operated by Alphabet’s Project Wing will be used to deliver goods to various communities and then researchers will get feedback from local residents. The data can be used to help develop regulations allowing widespread and routine deliveries sometime in the future.

Uber is working with San Diego, which wants to create drone landing stations and ports, according to a fact sheet released by DOT. Uber has announced plans to fly people on battery powered taxis, though the development and approvals are still years away and there’s no mention of attempting such operations under the current program.

“There’s a lot of excitement,” said Lisa Ellman, a partner in the Washington office of the law firm Hogan Lovells who represents companies in the industry. “I do think it’s a big step forward.”

AirMap, which offers a drone tracking service akin to an air-traffic control system, is a partner in six of the winning programs. The company believes the tests are an important step for helping the industry overcome public unease about privacy and nuisance issues raised by the growth of small drones, said William Goodwin, AirMap’s general counsel.

“By tackling these challenges head on, I think we’re going to get to better paradigms for how drones can operate around people -- and make money in the process,” Goodwin said.

Amazon Prime Air, a leader in drone delivery development, wasn’t listed as a partner on any of the winning programs. “While it’s unfortunate the applications we were involved with were not selected, we support the administration’s efforts to create a pilot program aimed at keeping America at the forefront of aviation and drone innovation,” the company said in a statement.

FAA Approval

At the same time, Ellman and others cautioned that the program was just a first step and the U.S. regulator, the Federal Aviation Administration, still has to approve individual test plans. So far, regulations don’t permit flights over people or over long distances and the agency has been cautious about approving waivers to allow such operations.

While the Transportation Department approvals were limited to 10 new test programs, the government plans to dramatically expand similar demonstrations, Earl Lawrence, the director of the agency’s drone integration office, told senators at a hearing on Tuesday.

“A large number of the projects and activities proposed by applicants could go forward under the FAA’s existing rules, including with waivers where appropriate,” Lawrence said.

The integration program, announced last October, is designed to allow state, local and tribal governments to test more complex types of flights than are allowed under current regulations. Data will be used by the FAA to help expand drone flights and to also test how to balance national versus local government interests in the emerging industry.

Once the winners are announced, “the FAA will be reaching out to other applicants, as well as interested state and local authorities, to provide additional information on how to operationalize their proposed projects,” Lawrence said in his prepared ramarks.

Under current regulations, small drones must fly within 400 feet of the ground, operate during the day and stay within sight of their operators. While the FAA has gradually begun approving waivers allowing night flights and other expanded operations, the industry wants to operate longer range flights for agriculture, inspections and deliveries.

Many of the programs include plans to fly on longer-range operations outside of the view of a drone’s ground operator. So-called beyond-visible-line-of-sight flights offer some of the greatest potential for commercial operations, but are also among the most difficult technically to ensure they don’t strike other aircraft or veer off course.

The FAA also has sent two proposed regulations for expanding drone flight to the White House for review, Chao said. The agency has said it hopes the proposed rules, laying out safety provisions when drones are flying above people and a requirement for them to transmit their identification, would be issued this year.

©2018 Bloomberg L.P.