In the United States, the Federal Aviation Administration (FAA) has moved very cautiously when it comes to allowing Amazon.com (NASDAQ:AMZN) to pursue its ambitious efforts to employ delivery drones.
The online retailer wants to use the unmanned vehicles to deliver packages using an automated system. That's not permitted under the latest FAA rules, issued in June, which require drones to be visible to the operator while only allowing each pilot to operate one drone at a time. The FAA does have a waiver process, which allows for most of its rules to be set aside "if the applicant demonstrates that his or her operation can safely be conducted under the terms of a certificate of waiver."
Amazon may well pursue that avenue, but for now it's working with a more willing partner to make drone delivery a reality -- the United Kingdom.
What is Amazon doing?
The online retailer is working with the United Kingdom to "explore the steps needed to make the delivery of parcels by small drones a reality, allowing Amazon to try new methods of testing its delivery systems," according to a press release. It added:
A cross-Government team supported by the U.K. Civil Aviation Authority (CAA) has provided Amazon with permissions to work on three key areas: beyond line of sight operations in rural and suburban areas, testing sensor performance to make sure the drones can identify and avoid obstacles, and flights where one person operates multiple highly automated drones.
Basically, the CAA has allowed Amazon to work on everything the FAA has outlawed in its rules.
"The UK is a leader in enabling drone innovation -- we've been investing in Prime Air research and development here for quite some time," said Paul Misener, Amazon's vice president of global innovation policy and communications. "This announcement strengthens our partnership with the UK and brings Amazon closer to our goal of using drones to safely deliver parcels in 30 minutes to customers in the UK and elsewhere around the world."
What happens next?
It's important to note that this is not the U.K. giving Amazon permission to unleash an army of drones on its citizens. Instead, it's a careful approval to work toward someday doing that. This deal gives Amazon the right to test its technology, so someday in the future when it can be safely and widely deployed.
"We want to enable the innovation that arises from the development of drone technology by safely integrating drones into the overall aviation system," said CAA Policy Director Tim Johnson in Amazon's press release. "These tests by Amazon will help inform our policy and future approach."
That's exactly what Amazon needs to be doing, and it should be a win for the company's global customer base. If it can prove that drones work in the U.K., then it should have the ammunition it needs to win FAA approval, and ultimately be allowed to use unmanned delivery drones in all its markets.
This is a case of the U.S. government being unnecessarily cautious while the U.K. has seized upon an opportunity for progress. That does not mean Amazon won't proceed with care -- especially when a high-profile crash would lead to approval problems around the world -- but it does open the door for progress.
Drones may not be here yet, at least when it comes to package delivery, but this agreement moves them closer. That won't impact Amazon's share price today, but if it solves this puzzle, it would remove the last advantage physical retailers have over the online leader -- immediacy. Consumers are going to eventually get drone-delivered packages and ultimately that will be a big win for Amazon.