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UPS Gains First-in-Industry FAA Approval for Drone Deliveries

UPS has become the first company in the U.S. to gain official FAA certification to run a drone delivery service, a potentially transformative ー and lucrative ー business that could change the logistics of parcel delivery.
But it's still a big if. As Scott Price, chief strategy and transformation officer at UPS, told Cheddar on Wednesday, the nod from the FAA is the first in a series of steps before UPS can begin actually delivering consumer packages. But it will allow the company to immediately begin testing drone delivery in "campus environments," such as hospitals and colleges.
"We are now officially a drone airline," Price said.
UPS is calling its drone unit "Flight Forward" and has already been piloting a delivery service at a North Carolina hospital complex, shuttling medical specimens between buildings. The FAA certification will now allow it to expand that pilot program to other closed campuses and begin to think about how it could use drones to deliver packages to rural customers (the approval will not allow delivery drones in urban areas, and it's unclear when, or if, drones will ever become a regular sight in populated areas where safety and noise concerns are pervasive).
The FAA ruling is seen as an important step in the commercialization of drones, which remain mostly the domain of hobbyists and law enforcement. Price said there still needs to be regulations involving "detect-and-avoid" systems, rules about altitude, and air-traffic-control protocols. Those are expected to be codified by the end of 2021.
While UPS is known for its brown trucks and brown-uniformed delivery drivers, it is also the largest airline in the world by destinations served. Price said Flight Forward will "augment" its air services and doesn't see a day when drones could replace air freight, or even the company's main truck-delivery business: "at the end of the day, it comes down to efficiency."
"We see it as an enabler of our growth," he said. "Not something that's going to transform the company on its own." He pointed to the fact that moving small packages by drone is cheaper (and greener) than moving them by vehicle, and the unit economics are particularly attractive in rural areas, where drivers often have to drive miles just to deliver a single box. Even that use case remains in the future; Price said "we're probably several years away" from delivering consumer parcels via drones launched from trucks.
For now, UPS will continue to test Flight Forward in the confines of closed campuses, and is hiring drone operators ー including many veterans ー to help manage its fleet. He said there is going to be a "huge need" for technical training programs focused on the flying and maintenance of drones.
"This is history in the making, and we aren't done yet," UPS CEO David Abney said in a statement.
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