Regulations and weak demand stall progress of Amazon's drone business

Regulations and weak demand stall progress of Amazon's drone business

March 15, 2023: Amazon’s Prime Air drone delivery service, which has been in development for a decade, began testing in two small markets at the end of 2022, marking a step closer to its founder Jeff Bezos’ vision of drone delivery. However, since then, progress has been slow, with Prime Air required to complete several hundred hours of flying without any incidents and submit that data to the Federal Aviation Administration (FAA), which oversees the approval process for commercial deliveries. Although Prime Air has signed up about 1,400 customers for the service between the two test markets in College Station, Texas, and Lockeford, California, FAA restrictions prohibit flying over people or roads, meaning it can only deliver to a handful of homes. Continued friction between Amazon and the FAA has slowed progress, according to current and former Prime Air employees. The company has claimed that thousands of residents have expressed interest in the drone-delivery service, but operations have been hamstrung by FAA restrictions that prohibit the service from flying over people or roads, according to government records.

In mid-January, Amazon’s drone delivery head David Carbon gave his weekly update on Prime Air to employees in his “AC/DC” video address. In the video, Carbon revealed that Prime Air had recently started durability and reliability (D&R) testing, a key federal regulatory requirement that proves Amazon’s drones can fly over people and towns. However, there is a large gap between starting the D&R testing and completing it, and some employees have expressed scepticism. Carbon has been telling Prime Air staffers that D&R testing is underway since at least March 2022, and he even had baseball caps made that said “D&R 2022” with the Prime Air logo on them. But the FAA only provided clearance for testing in December 2022, and the company began the campaign in January 2023. In January, a significant number of Prime Air workers were let go as part of Amazon’s largest-ever round of layoffs, which totalled more than 18,000 people, further straining operations. Amazon has said it plans to expand its drone-delivery service over time, but progress is dependent on FAA approval.