Israeli Drone Startup Flytrex Takes to U.S. Skies

Bookmark

Three years after launching his drone startup, Flytrex, Yariv Bash made a pivot. What started in 2013 as a supplier for drone manufacturers and hobbyists became a delivery service provider. “We realized that the killer application for drones was going to be backyard delivery,” Bash says. Soon after, the Israel-based company became one of the first commercial drone operators, delivering groceries and other goods in Reykjavik, Iceland.

Since then it’s added small-scale test routes in North Dakota and North Carolina. In September, Walmart Inc. announced it would begin using Flytrex drones to make deliveries as part of a pilot program in Fayetteville, North Carolina. A few months earlier, Flytrex and partner Causey Aviation, a private jet charter company, had filed paperwork with the Federal Aviation Administration to be recognized as an unmanned air carrier. If the approval comes through—Bash expects it sometime in the next couple of months—Flytrex will join Alphabet Inc.’s Wing, United Parcel Service Inc. and Amazon.com Inc.’s Prime Air as the only FAA-sanctioned drone delivery operators in the U.S.

Like its much larger competitors, Flytrex has been part of the FAA’s unmanned aircraft Integration Pilot Program (IPP), begun under the Trump administration in 2017. In October the FAA announced that the program would be rolled into a new initiative called Beyond, which will work to create rules for drone delivery operators to fly beyond the line of sight. Once that happens, Bash says, Flytrex will be able to begin filling suburban skies with drones carrying hamburgers, sneakers and smartphones.

We spoke with Bash by phone about his hopes for Beyond, competing with Amazon and not crashing into airplanes. The conversation has been edited for clarity and length. 

Israeli Drone Startup Flytrex Takes to U.S. Skies

What should we make of the end of the IPP and the launch of Beyond—how is it meaningful? And what are your hopes for the new program? 

It’s very meaningful. The IPP focused most of its efforts on the airworthiness side of things. The FAA basically says, “We’ve inspected your design. We’ve inspected your production. And we know that the vehicles that will come out of your production facility are good to go. We trust that they won’t be crashing on people’s heads.” The Beyond program is focused on expanding the envelope of the flights. How can those now-airworthy vehicles integrate with the U.S. national airspace in a way that doesn’t jeopardize other airplanes? There’s no concern of you hitting anyone on the ground. Now let’s solve the problem of you hitting other airplanes. 

If the shackles were off, so to speak, how far could you fly with your current hardware?

What we care about is distance. If I can double my flight range, I quadruple the population I can serve. So basically the farther I can go, the more people I can serve. With our current drone that can fly up to almost 3 miles, I can serve 7,000 to 10,000 families in a typical suburb. In our next drone, with the Beyond program, we’ll be able to go up to 5 miles away, and then you are talking about 15 or 20,000 families. 

What needs to happen on the regulatory front for this to work? 

The FAA has put tremendous effort into that. The amount of resources that the FAA is dedicating to work just with Flytrex is amazing. We’ve got multiple phone calls on a weekly basis with different FAA teams. They’re not willing to skimp on any point of the delivery process, but they are willing to invest a lot of effort in making sure that we comply with their demands. It’s really a thorough process. Hopefully, at the end of that process, we can start to show the potential of drone delivery.

Do you expect any shift in the regulatory approach with the Biden administration?

The IPP program started with an executive order from the current administration shortly after Trump took office. But the commercial benefits of drone deliveries are just something that no one can deny. The implications for the retail industry are incredible. And the U.S. is in a very good position to lead that effort worldwide, because once the FAA shows the way—and hopefully it will be the first country to offer a viable regulatory framework—most of the world would rather just copy and paste that framework. 

Is it possible with the current technology to have a system in which drones don’t run into other drones and low-flying aircraft?

The key here is to make sure that drones are the last priority—that we are not disturbing anyone else. We’ll solve the conflicts between us. My system will be connected to an unmanned traffic-monitoring system. Other unmanned delivery companies will be as well. And we’ll de-conflict that using computer algorithms. That’s the easy part. The hard part is making sure that the same guy that has been flying with his wooden 1930s airplane for the past 50 years can continue to do that in a safe manner and that we will not be creating any kind of hazard or risk to this guy. 

Israeli Drone Startup Flytrex Takes to U.S. Skies

What differentiates Flytrex from other drone operators?

If you are talking about the companies that have been in the IPP, most of them are focused on point-to-point deliveries. Companies like Zipline can take medical supplies 100 miles [round trip] with a fixed-wing airplane that drops the supplies with a parachute. That’s great for a hospital in Africa and maybe for a rural community in the U.S., but it’s not the right solution for someone’s backyard. You need to build a vehicle that can replace a minimum wage guy delivering your hamburger to your house. The vehicle itself has to be very affordable. You have to build operations that enable a lot of deliveries for this to be profitable. So it’s a high-bandwidth, low-margin, short-range kind of a system. The only two other companies that are doing that are Amazon and Google. 

Those are some pretty big names. How do you beat them? What do you have that they don’t?

I’m just waiting for Amazon to start, because once they start doing drone deliveries, the rest of the market will need a similar solution. If they are going to offer you a Prime delivery service where you get everything you need in half an hour or less, all the rest of the retailers, from Best Buy to McDonald’s, will need a similar service. Given two options with the same delivery price—next-day delivery with Best Buy or 30 minutes with Amazon—guess which one you are going to choose.

So your vision for scaling this is to have distribution points or fulfillment centers not too far from tens of thousands of potential customers? 

Someone already solved that for us: shopping centers. They are located exactly where we need them. They’ve got multiple restaurants and retailers. In North Carolina we still don’t have a date for starting operations, but we are going to support multiple restaurants and retailers in that shopping center from Day 1.

What will the drone delivery industry look like when it’s mature, and how long will it take to get there?

In the next year or two, you are not going to see too many companies, because there is a huge regulatory moat. But I’m guessing that in two to three years’ time, you are going to see a lot of competitors—the potential will be known, and you are going to see a lot of money being invested. My guess is that in five to seven years, you are going to see a lot of companies being merged until you reach a mature market, where you have a few large companies—just like a retailer today can choose between contracts with UPS or FedEx.

Will Flytrex be one of the choices when that day comes?

One can only hope. There is the old saying that if you want to make God laugh, just tell him your plans.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.