What are the key milestones to delivery-by-drone becoming a commercially mature business?
We’re still in trials and the whole industry is probably a year or two away but business is fantastic. The space that we’re in now is actually being taken very seriously so I think there’s going to be a tonne of capital and investment coming in, which is very exciting. I think people are beginning to believe that the thing is real, that the opportunity is there – prior to a couple of years ago it was only people like Amazon and Alphabet considering this. I’ve been around this business for nearly three years now and I know from my conversations with investors that they see that now is the time, which is great. It’s just the US that’s behind everybody else but it’s looking very encouraging.
You’ve been trialling food delivery – is that the major focus of your work?
Yes. The big one now is in Ireland, in Galway. We’re flying off the roof of Tesco, delivering 900 products and partnering with Just Eat and local restaurants and vendors. We’re serving from eight in the morning: coffee, breakfast, lunch, dinner, convenience stores, pharmacies, books, printer cartridges, literally everything that you need in the local community – in three minutes. There’s 10,000 people in this town and we’re flying two aircraft, undertaking about 100-150 deliveries a day. So it’s small but a great representation of what the future is gong to look like.
We’ve also been working in Moneygall since March, more exclusively delivering medicine and critical food supplies. The Galway operation is much broader and we are planning to operate between 50,000-100,000 deliveries in the next six months. We want to show how a community can change its behaviour or adapt to drone delivery operations – and we’re working with Tesco on that, to understand the impact on retailers.
How did you get all the permissions?
The town of Oranmore has about 3,000 houses – we can get to nearly every single house by flying over fields. We do “spaghetti journeys” to get to them and avoid most roads. We do cross roads and private spaces but we’ve 25,000 flights on the clock now and have incredibly strong safety systems on the aircraft. The aircraft is autonomous – we have two “pilots” observing from the base and we have visual observers at the destination, so we’ve people everywhere making sure everything’s safe. But from the point of view of the technology and what the consumer sees it’s 100% real. You open the app, you go to the Tesco 900 products, you place your order and it will arrive at your house less than five minutes by drone.
What’s been the reaction from the local community?
They’re delighted. Huge support. In the first town we operated with 95% of the households using the delivery service multiple times we got great uptake. Now we’re absolutely swamped with love from the locals. We’ve engaged with the residents’ associations and we’re working with the Galway Chamber of Commerce along with all of the retailers, not just Tesco. Tesco’s our anchor, obviously, but all the retailers want to use the product and want to be part of the trials.
So it’s viewed really positively by the community, by local government, but most importantly by main government, who are hugely supportive. We are essentially a company that’s half Irish and half Welsh. A lot of our components are built in Spiddal, small town in Galway, by a 60-person company, who build a lot of parts for Bombardier aircraft so they know about building carbon fibre with a guaranteed spec sheet. There’s no Chinese tech, there’s no American tech – this is a European success story.
What have been your largest technical issues and challenges?
The biggest challenges are out of our control – the misuse of drones. That has held back the whole industry. In Gatwick and here in Ireland we had have fools flying drones in airports. Thankfully there’s some great actors as well, like Zipline, and they’re doing a good job. They’re respecting privacy, they’re respecting safety and they’re in it for the long haul – using drones for the right reasons. But the appetite for investment in this space is being constrained. Until governments feel that populations will be happy about drones at scale they are going to wait and that means regulation is going to wait.
When you see Amazon and UPS getting their part 135s, and Alphabet, you see the intent from large companies. They know there’s customer demand for this. On a smaller scale we now have a 95% positive rating. I don’t mean they love the service, I mean 95% of the people we make it available to use it and for me that’s a change that has been brought about by COVID. Prior to COVID we were seeing around a 65% positive response in people who were surveyed about their views of drone delivery. But 5-10% said “no, I don’t want them.” That 5-10% doesn’t sound like a lot but it’s a massive number and you can’t ignore it.
So the big issues – and non-issues – that are holding the industry back are: noise, privacy, security, job losses and the public’s view of safety, though most people don’t think about safety, they assume it’s safe. Many people have voiced concerns that with the rise of robots comes mass job losses. It’s not true. It very clearly will increase demand and change society for the better, and opportunities will increase particularly for local retailers at the expense of big tech.
If you think about a bookstore in a town of 25,000 people that bookstore should be able to serve its customers with a relevant and profitable list. But if that bookstore doesn’t have delivery, people will order from Amazon and the book will come from a fulfilment centre in Holland and be transported by ship or whatever. Big tech has such an advantage. But drone deliveries can enable a micro delivery network in rural and suburban communities which will empower retailers to have a profitable access to their customers that they didn’t have before. So that’s really interesting.
If you examine how the general population and governments are looking at what we’re doing, there’s a potential to really help new businesses outside dense urban areas in a positive way. So it has to be viewed as positive by governments.
What are your next milestones?
We’re focussed now on gaining our Type Certification and Operations Certification so we’ve started the process of part 135; our target is to start scaling commercially in a single market in 12 to 18 months from January next year. I can’t tell you where that market is because I don’t know – there’s multiple opportunities. We believe that we will be able to scale commercially, ramping up the production of aircraft and doing upwards of hundreds of thousands of deliveries to really start thinking about building a profitable business. That’s realistically less that two years away. Work on our aircraft is nearly complete; the fuselage comprises an internal skeleton which is carbon fibre and outside is just a shell, so we’re going to change that to a single monocoque carbon fibre frame. That’s the last big change and that’s more around manufacturing than efficiency. Once we get that we’ll be in a position to scale manufacturing and with that aircraft we’ll apply to fly in the USA and Europe. And that’s really the big milestone for us.
We’ve 34 people in the company now. We won’t grow above 100 in the next 12 months. The business won’t be commercially viable until 18 to 24 months from now.
What are the payload and range specs for your current aircraft?
The cargo cassette is about the size of a large shoebox. Our aircraft can fly about 14km on a full tank, so seven out and seven back, but we are only flying 2-3km right now. There are two reasons for that: we need the capability to fly in strong winds and we want a massive energy buffer in the tank. We’ll fly about a 3km radius in Ireland in the future. The other reason is aircraft productivity. We’ll fly that 3km radius in about six minutes, so three minutes maximum flight outwards, and that means we can do about eight to 10 deliveries per hour per drone. But if you double your distance you’re only going to serve an additional 10% of demand but you’ll halve the productivity. So even though it’s still a couple of years away from being real we still want to focus only on what we know will scale. And what will scale up is a two to three or maybe 4km radius business.
How does the delivery system work?
The goods are inside the aircraft. The way we think about the process is we fly between 60-80km per hour, 50-80 metres altitude, and when we arrive we descend to 15 metres and hover there. The doors open and we lower the product down using a disposable delivery system – a biodegradable linen thread – which we leave behind. We may or may not stay with that, we’re not sure. We have another system which is fixed, retractable tether. We don’t know the answer to which is the best version yet. It might well be a retractable tether but for now the disposable tether works really well because it is simple, mechanically reliable.
What will the business look like in five years’ time?
In five years’ time we will have one city of 20 million people – and I know which city that is – and drone delivery will be pervasive there. It will have replaced about half of road-based deliveries.
The aircraft will be based on a helicopter design. We don’t like the fixed-wing design in winds; we just want to be able to support operations in most weathers so it will be ‘copter, short-range and prettier than the current aircraft. Battery technology will definitely have evolved in five years; I think it will be at least 50% better than now and you can apply that to either distance or cost, take your pick. That will bring big improvements because our battery right now is 2.5 kilos and if you could double the energy density you obviously would halve the size of that battery but keep the same operation. Halving the size of the battery would make more room for cargo or let you shrink the aircraft. I put those in the optimisation bracket. With today’s technology it costs us one dollar for one delivery. That includes battery depreciation, motor depreciation, copter depreciation and personnel.
It costs a restaurant today between six and nine dollars to get a delivery to a house using ground transport, so it’s phenomenally more efficient.
What can regulators do to help you?
We work with the Irish Aviation Authority (IAA) and they’re incredibly fast to work with. We can pick up the phone and have a conversation any time and they’ll come out and spec things for us. They’re an unbelievable part of our team and really helpful. They don’t cut corners and we don’t want them to because they are so robust, but they also really want this to work. So the first thing that we need, we have.
The second thing that we need is an expedited process for certification. So we need regulators to get behind that; and we need clarity on the operational roles in the market so who’s responsible for UTM and answers to those questions. But we’re not in a rush for this at the moment. In terms of what the European Aviation Safety Agency (EASA) is doing I have no complaints; they’re very clear on timelines and we need this because the phase to full commercialisation is going to be enabled and supported by investment. Investors need to understand the space and they’re not going to believe Bobby Healy, they’re going to want validation that this sector is going to happen in three years, not 15 years, and it’s for government and regulators to provide clarity on this.
I think EASA does a very good job and when I have a conversation with investors I introduce them to EASA or IAA because I’m confident that they will be given a good, clear answer. I’d love to see that in the USA as well. I think good strides have been made but it’s less clear when commerciality will be real in the USA.
Does the business case for drone delivery really make sense? Is there enough patience and money?
Yes there is. I think there’s enough evidence now that governments and regulators want to commercialise the space and I think there’s a little bit of a lack of leadership from the private sector. There’s great organisations like GUTMA doing great work but someone needs to just go throttle up and see what happens. I’d look to Wing to maybe be that company. Unfortunately, they’re in the USA.
It could also be us. I see a handful of markets that are not necessarily in the European Union that are willing to allow us to commercialise business at scale. The problem is we’re not ready and we’re not about to commercialise something that’s not safe enough or ready to scale.
But I do feel pretty confident that we will be there in less than two years and the market will be ready to allow us to do that. I’ve been having the conversations and I’m pretty clear. Some of these markets are not in the USA; they want to lead the world as a smaller market in getting there first. So long as we believe that we’re safe, we’ll do that.
It is always easier if you have a state with a single regulator and a single city authority.
Yes. It is always easier when we can expedite decisions than going by consensus. The EU has done a remarkably good job; the EASA drone regs are in place they’ve been pretty impressive. So it’s not that the bigger economies can’t get there it’s just that for me they’re not clear enough about when that’s going to be. For us, it doesn’t matter where the first market is – the key issue is to ensure we can do it technically and safely and then just get going. Because I can promise you if we get going and we do a good job in City X and the world sees what that looks like, then others will quickly follow.
Do you get a fair press?
The narrative is either sensational clickbait or slightly negative. Is it unfair? No. I think the industry has made a lot of missteps and I think the narrative is a fair representation of where we are. We’ve enabled autonomous drones to be sold off-the-shelf by electronics retailers and the drones can fly five miles away with no ability to track or trace them, to interrupt massive airport operations. That’s on us. If anyone’s talking negatively about our industry, we had it coming. Now it’s for us to rectify that. And if bad actors can be reined in with regulation or legislation, I think a positive narrative will follow.
And we’re sensitive to that. We know we’re acting well but we do seek to try and have positive use cases. So we’ll be delivering COVID test kits and doing things that are outside of commercially rational things to do and I think you’re going to see results from that. The BBC covered us in our first town and it was really positive coverage.
I feel a bit annoyed when they bring in an industry expert who’s negative about the space and that’s frustrating because it clouds the issue. But I think the general narrative is a fair reflection of where we are today.