For a company which wants to introduce drones as an efficient way to deliver mail order, Amazon.com Inc (NASDAQ:AMZN) endured a bad pilot trip on Thursday.
The online seller was fined $130,000 by the US Federal Aviation Administration for allegedly mishandling shipments of dangerous chemicals. The fact the shares still advanced by 1.6% to $722.08 says more about the relatively minor size of the fine for a company with a huge turnover than it does to protect the online retailer’s reputation.
The proposed fines cover two shipments of materials in May and June 2014, and come less than two weeks after the FAA proposed a $350,000 fine against Amazon for a shipment that injured several UPS workers who handled a package.
Amazon has 30 days to respond to the FAA.
The FAA said Amazon in May 2014 sent packages containing corrosive rust stain preventer from Illinois to Florida. Workers at FedEx’s sorting facility in Lake Wales, Florida, discovered one of the containers leaked through the cardboard box. The FAA proposed a $78,000 fine.
The FAA also proposed a $52,000 fine after it said Amazon sent a flammable gas from Whitestown, Indiana, to Glendale, California, in June 2014. Workers in UPS’s Louisville, KY. sorting facility discovered the container. The shipments were not properly marked as hazardous materials, FAA said.
But all the fines and the incidents add up.
Meanwhile, this week The Department of Transportation may have just grounded delivery drones, effectively cancelling Amazon's plan to deliver packages via drones.
The FAA released the first operational rules for commercial drone use, creating new regulations to better integrate unmanned aircraft safely into U.S. airspace. However, the rules seem to eliminate any chance of drone delivery systems currently in development.
The new rules require all drones to weigh less than 55 pounds and fly below 400 feet, which Amazon Prime Air is already said to comply with, but the big problem is dealing with the piloting of the drone. Another new rule requires pilots to keep the drone within their visual line of sight and for each pilot to have a remote pilot certificate. But Amazon's proposed drone system doesn't use pilots, instead relying on "sense and avoid" automation technology.
Other rules may also effectively ground Amazon and other drone delivery programs, such as the FAA's prohibiting "flights over unprotected people on the ground who aren't directly participating in the UAS operation," which could imply private homes and neighbourhoods entirely.
Drones are starting to get a bad name. Not only are there privacy issues surrounding them, one private drone found itself colliding with a British Airways inbound flight to Heathrow from Geneva back in April.
Indeed, some municipals are taking on drone syndrome. Californian city West Hollywood is challenging privately-operated drones in the name of privacy and safety.