Amazon’s Drone Business Struggles with FAA Drone Regulations and Weak Demand

Amazon's drone delivery service, Prime Air, has been in the works for a decade, but the company is still struggling with drone regulations and weak demand. Despite its recent launch in two small test markets, Amazon has a long way to go to deliver food, medicine, and household products to customers' doorsteps in 30 minutes or less.

To fly over people and towns, Prime Air must complete several hundred hours of durability and reliability (D&R) testing without any incidents and then submit that data to the Federal Aviation Administration (FAA). However, the FAA only granted clearance for testing in December, much later than Amazon had hoped.

According to CNBC, Amazon has been conducting D&R testing since last March, and the company started the campaign in January 2023. The FAA oversees the approval process for commercial deliveries, and it will be a significant hurdle for Prime Air's expansion.

FAA restrictions and drone regulations

Despite the recent launch of Prime Air, the company is struggling to make progress in its drone delivery efforts due to FAA restrictions and drone regulations that prohibit the service from flying over people or roads. Even in the two test markets, Prime Air can only deliver to a handful of homes, and operations have been hamstrung by crashes, missed deadlines, and high turnover.

Amazon is working on its next-generation Prime Air drone called the MK30, known internally as CX-3, which is supposed to be lighter and quieter than its predecessor. However, the company will have to go through the same regulatory process, including a separate D&R campaign and type certification, to produce drones at scale.

Amazon CEO Andy Jassy has not talked much about Prime Air in public. His focus has been on navigating a period of deep cost cuts while trying to reaccelerate the company's business after revenue growth in 2022 was the slowest in its quarter-century on the public market.

Even though Prime Air has signed up about 1,400 customers for the service between the two test sites, some employees say continued friction between Amazon and the FAA has slowed progress in getting drone delivery off the ground.

The FAA declined Amazon's request to remove several restrictions on the operation of the MK27-2 drone in November 2022. The aviation authority stated that flying over or near people is not yet permitted as full durability and reliability parameters have not been established.

David Carbon, Amazon's drone delivery head, is optimistic about Prime Air's future and said the company has a target to make 10,000 deliveries this year between its two test sites, even with the D&R campaign unfinished and FAA limitations in place.

“We started D&R and we're into D&R as of the time of this filming by about 12 flights. So, really excited to get that behind us,” Carbon said.

Carbon unveiled a mockup of the next-generation Prime Air drone called the MK30 in November 2022, and the company expects to launch it in 2024.

“We're as excited about it now as we were 10 years ago — but hard things can take time, this is a highly regulated industry, and we're not immune to changes in the macro environment,” Maria Boschetti, an Amazon spokesperson said. “We continue to work closely with the FAA, and have a robust testing program and a team of hundreds in place who will continue to meet all regulatory requirements as we move forward and safely bring this service to more customers in more communities.”

Amazon's Prime Air drone delivery service is an ambitious project that has yet to take off due to FAA restrictions, drone regulations and other challenges. The company is making slow progress in getting drone delivery off the ground, but it remains optimistic about its future.

Photos courtesy of Amazon.