Amazon Drones: Grounded Before They Get a Chance to Take Off?

In a new document, the FAA places limits on using unmanned aircraft for package delivery.

Jun 25, 2014 at 7:30PM

Amazon Prime Air Drone

Amazon doesn't expect guidelines for commercial drone use before 2015. Credit: Amazon.com.

When the Federal Aviation Administration (FAA) unveiled guidelines for more tightly regulating unmanned drones on Monday, speculators wondered if Amazon.com's (NASDAQ:AMZN) Prime Air delivery service would be grounded. Turns they were right to fear the worst. The FAA has since clarified that commercial package delivery isn't (yet) allowed.

Hope doesn't float
If there's excessive head-shaking over the agency's decision, it's probably because it was only last month that the FAA cleared a facility in North Dakota for testing of unmanned aircraft. Most took that as a sign the agency would be quick to approve drones for package delivery and other tasks.

So much for wishful thinking.

And yet the ruling may not be targeting Amazon so much as existing commercial fliers. VentureBeat cited an expert who says the FAA is after small operators who've moved ahead without waiting for the agency to clarify its policies. Among the list: Minnesota's Lake Maid Beer Co., which has used drones to deliver beer to ice fishermen.

The hard work begins
Now, with a comprehensive document, we know that beer-by-drone isn't coming to your neighborhood anytime soon. Nor are Amazon drones:

Faa Drone Guidelines

The FAA's guidelines for unmanned model aircraft, according to a recently posted "request for comment.". Credit: FAA.gov.

Should investors worry? I don't think so. At its page for Prime Air, Amazon is very clear that, while it holds promise, taking the service from concept to reality "will take some number of years as we advance the technology and wait for the necessary FAA rules and regulations."

In the meantime, Amazon is already at work on other ways to introduce same-day delivery to consumers who prize convenience. An in-house trucking network supports the company's AmazonFresh grocery delivery service. Other times, the e-tailer relies on contracted drivers to deliver packages directly rather than relying on either of the two major shipping services.

Same-day slugfest
Either way, Amazon is moving us toward a commerce-on-demand future that's not so different from what we get now with streamed media -- and everyone else, including the U.S. Postal Service to upstart competitors like Instacart, is along for the ride. 

Google is in on the game with a service called Shopping Express, using branded vans to pick up and deliver from a variety of retail partners. Wal-Mart's To-Go option works similarly: shop the store online, take delivery from a Wal-Mart truck. Finally, there's the aforementioned Instacart, which is reminiscent of Uber in that it arms freelance shoppers with an algorithm-powered app and an order to fill.

My point? The war to win shoppers with same-day shipping began well before Amazon introduced us to Prime Air. And it won't end when the FAA decides it's OK for a drone to drop a box on your porch.

Now it's your turn to weigh in. Do you believe Amazon drones will get off the ground? Leave a comment below to let us know your take, including whether you would buy, sell, or short Amazon stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google (A and C class) at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Amazon.com and Google (A and C shares). The Motley Fool owns shares of Amazon.com and Google (A and C class). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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