Can the drone industry show us the way to flying cars?

What blockers are slowing down mass adoption of Urban Air Mobility?

Jan 16, 2023

Drone Delivery

All Unmanned Aerial Vehicles (UAVs) need two things:

Hardware that flys.
Air space to travel in.

Many of the companies have the first and are pitching for the second.

In 2022, more than c.2,500 commercial drone deliveries were happening every day. This adds to over c.100,000 commercial aircraft flights globally per day which shows the size of the addressable market for this sub-sector. It must be borne in mind that of these 100,000 daily commercial flights the current drone solutions offered do not make a dent, due to the inability to move heavy packages. This is why it would appear lighter payloads are the target for the current drone companies, based on the current solutions they offer.

"Necessity is the mother of invention." Indeed, in order for drones to become a cost-competitive mode of transportation, we must shift from simply observing airspace to actively operating drones. To achieve this shift embracing technological and regulatory advances needs to allow a single operator (or automated system) to manage a greater number of drones in crowded airspaces.

To this end, Venture Capital must invest in autonomous flight capabilities, unmanned traffic management systems and sense-and-avoid solutions that ensure the safe operation of drones. We must secure the buy-in of air rights owning stakeholders, a critical step in realising the full potential of Unmanned Aerial Vehicles as a scalable mode of transportation and delivery.

Medicine

Drones are increasingly being used to deliver medical supplies, including blood to remote and hard to reach locations. Companies such as Zipline, Vaayu, and UPS have all implemented drone delivery programs for medical supplies. In Rwanda, Zipline has completed over 100,000 flights and delivered over 3,000 different medical products to over 1,500 health facilities. In India, Vaayu has completed over 5,000 flights, delivering over 2 million medical products to over 1,000 health facilities. And in the US, UPS has expanded its drone delivery operations to include the transportation of blood and other medical supplies after completing its first successful drone delivery of a prescription medication back in 2019. Drones can significantly improve access to healthcare in remote areas and save time and resources, especially in emergency situations.

(McKinsey)

If drone operators can eventually manage 20 drones simultaneously, McKinsey Research analysis, using reasonable assumptions, suggests that a single package delivery will cost about $1.50 to $2. Consider this for a healthcare use case - on top of a disruptive business like Mark Cubans' Cost Plus Drugs and all of a sudden the most disadvantaged in society get to play on a level healthcare field.

Food

Manna, which has raised c.$30m in funding is widely referred to as a leader in the European drone delivery industry. They deliver small items such as coffee, fast food, minor groceries and pharmacy products, as long as the overall weight is under 2kg. Delivery is in under five minutes to within 2km of its base. The company has completed 100,000 such test flights. Other notable companies with food in the skies include; Flytrex and Skydrop

Making assumptions about the relatively lighter payloads needed, the question is what current items have the level of demand frequency required for this to be financially beneficial? Unit economics are not published but taking into account the factors outlined above and adding back in licences for the air rights there are returns up and down the food chain if it can scale.

Given the cost and sustainability benefits of drone deliveries, growth focused retail chains, restaurant groups, medical suppliers and supermarket chains need a defined strategy for their use.

They should consider several questions:

How receptive will customers and the local communities be?
Will local property owners welcome your service and partner with you?
What locations will have the greatest upside for drone delivery?
Is frequency the forcing function?
What products can be delivered by drone eg. weight and perishability?
Will new infrastructure or upgraded facilities be required, e.g. drone launch pads?
How well can drones be integrated into current operations?
Will your current tech stack and people departments be ready?
Are there partners to manage this or do you take it in house?
How can drones help contribute to the company’s ESG goals?

"It is not because things are difficult that we do not dare, it is because we do not dare that things are difficult." - Seneca

Alphabet’s Drone Delivery Demo

The small-scale demonstration will be the company’s ‘first small step’ in Ireland. Alphabet, ($1.12 trillion market cap), subsidiary Wing has confirmed North Dublin as the location for its demonstration in Ireland. This will not be the same as the commercial services they operate in Finland, Australia and the United States.

The company chose Ireland because of the support of the Irish Aviation Authority. Ireland has been a home for drone technology in Europe and an incubator for innovation. Although some stakeholder are concerned about their air rights.

Wing began in 2012 as a project at X, the ‘moonshot’ division of Google parent company Alphabet. The first live deliveries took place in 2014, it went on to become an independent Alphabet business in 2018. They deliver a range of products such as medicine, food and books.

(Wing)

BT invests £5m in company planning a ‘drone superhighway’

BT the telecoms group’s is investing the money into the drone firm Altitude Angel, to support its work on Project Skyway. The scheme would involve a 165-mile drone corridor created above Reading, Oxford, Milton Keynes, Cambridge, Coventry and Rugby – in what the two firms hope will become the UK’s drone superhighway.

Altitude Angel is working on software that detects and identifies drones, while also enabling the small aircraft to safely share airspace with other, crewed aircraft. Under the £5m deal, BT Group will provide connectivity and network infrastructure to allow Altitude Angel to roll out its software.

Glendale residents have a problem with Walmart drone delivery service

Walmart, $390 billion, has recently begun testing their large delivery drones in a neighbourhood off of 59th Avenue and Bell Road. According to reports, the drones, which can deliver items weighing up to ten pounds within 30 minutes and span multiple feet in diameter, have been causing noise disturbance, with some describing it as sounding like a helicopter flying directly above their homes.

This news has raised concerns among residents with the rights of residents up in the air. Autumn Johnson, a homeowner in the area, has expressed her worry that "before this comes, sort of a pervasive technology, there needs to be parameters in place to protect our concerns." And to fairly compensate property owners.

Thank you for reading Where is my flying car?. This post is public so feel free to share it.

Amazon Prime Air Starts Drone Deliveries in California And Texas

Amazon, $890 billion, has begun delivering packages to Prime members via drone in two American towns. The service, called Prime Air, was announced in June, with Lockeford, California, and College Station, Texas, the first locations to receive aerial deliveries. Amazon aims to deliver packages by drone within 60 minutes, and has been working towards this goal for almost a decade. Customers in the pilot towns can sign up for the service, and will be informed if the company can deliver safely to the customer’s address before receiving detailed delivery information. Amazon's drones are equipped with industry-leading sense-and-avoid systems to allow for flights without human observers.

(Urban air mobility news)

All this should help me in my search for a flying car.

(Lexica)

If the proliferation of drones gathers interest from people who want more urban mobility solutions, it may help get us closer. Medicine to remote locations does moves us in the right direction from a societal point of view, it can literally save lives.

Do we have the ingredients to make urban UAVs/drones work at scale?

✅ UAVs/Drones.
✅ FAA to ensure public safety. (US)
❌ Urban air traffic management system (below commercial air space).
❌ Air space to fly in legally.

The elephant in the room is the lack of representation of those who own the air rights to the air space. One of the fundamental requirements of all UAVs is they need air space to travel in. It is a single point of failure. I will discuss this in next weeks newsletter in more detail.