UPS just formed its own drone operation company — and it’s another edge against Amazon, FedEx, and Uber in the quest for unmanned deliveries

UPS on Tuesday announced its new drone subsidiary business, UPS Flight Forward Inc., has applied for Part 135 certification.
That certification would allow UPS to operate drone delivery routes throughout the US.
In March, UPS became the first company to launch regular, revenue-generating drone deliveries in the US.
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Big names from Intel to Amazon to Uber to Walmart have rushed into the drone logistics market — a sector that’s on track to reach $29 billion by 2027. Many of these pushes into drone testing have been highly-publicized, but lacking in terms of actually generating any money for the companies.

And, in March, UPS beat out its competitors to become the first company to achieve regular, revenue-generating drone deliveries. It wasn’t from delivering an e-commerce parcel or a box of pizza — but blood and organ samples.

"Our focus is on healthcare, just-in-time, real urgent movements, life-changing events in hard-to-reach locations," Bala Ganesh, the vice president of the Advanced Technology Group at UPS, told Business Insider in July. "That’s our primary focus because that’s where we believe there’s a new market, a new innovative use case that has not been satisfied today."

Since then, UPS has made five to 10 deliveries a day around WakeMed’s medical campus in Raleigh, North Carolina. Drone delivery cut the transport time from up to 30 minutes to three minutes and 15 seconds.

On July 23, UPS flexed its muscles in drone delivery again with the announcement that a newly created subsidiary of the company, UPS Flight Forward Inc., has applied for Part 135 certification with the US Federal Aviation Administration. That certification would allow the logistics giant to expand its drone operations from North Carolina to nationwide.

This move from UPS shows that there’s consistent money to be made from unmanned delivery operations — but there are regulatory hurdles to overcome in order to implement drone deliveries. "We want to start moving forward into a sustainable business model and we are creating the appropriate organizational regulatory frameworks that can help us to scale as we move forward," Ganesh told Business Insider in July.

Courtesy of Ryan Davis/UPS

Currently, UPS is operating under an FAA program that the US Department of Transportation launched last May. The FAA announced that 10 state, local, and tribal governments were approved to work with private corporations to test drone technology. Uber, FedEx, Intel, and Qualcomm, as well as startups like Airmap and Flirtey, are other known participants.

Amazon, which has made several public pushes into drone testing over the past few years, was notably not part of the pilot program.

The North Carolina Department of Transportation, working with UPS and drone company Matternet, is one of the participants, though UPS’s involvement in the program was previously undisclosed.

One other drone company has Part 135 certification — Alphabet’s Wing. It’s complicated to secure Part 135 for unmanned aircraft as the rules for that certification, which also apply to traditional and passenger airlines, outline the need for pilots, cockpits, and other elements that a drone would naturally lack.

Once UPS has Part 135, Ganesh said the company will scale its medical delivery business to other hospitals around the country.

"The era of testing and storyboarding is over," Ganesh said. "We are moving into a much more scalable business model phase. There’s a variety of things that need to come together for us to make this happen. There is the technology does the regulations, our operational framework and then the appropriate costs, revenue, and profit alignment as we move forward. And what I’m trying to do is put all those three together into a sustained organizational model as we move forward."

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