Home » Drones

Category Archives: Drones

Drone’s – overcoming complexity to save lives

Droneport-A22

New technologies, such as drones, are giving humanity new capabilities and techniques to simplify otherwise complex situations and improve lives by doing so.

One of the best examples of drones overcoming complexity, by leapfrogging infrastructure constraints, to do good is the RedLine cargo drones and drone ports initiative led by Jonathan Legard and designed by famed architect Lord Norman Foster.

Foster who is credited with ‘inventing’ the modern airport and the world’s biggest airport, plus the world’s first purpose-built commercial spaceport for Virgin Galactic in New Mexico and designed Lunar building studies, which would be built by robots, in conjunction with the European Space Agency, as well as creating some of the world’s most iconic building designs has partnered with Legard’s RedLine Drones and has built the first prototype Drone Port which he says will have a very broad social agenda.

Very complex supply chain challenges

Lagard has identified Rwanda to be the first destination on the African continent to build the Drone Port designed by The Norman Foster Foundation, which was able to harness the creativity of students and professors from five universities around the world at institutions including MIT, ETH Zurich and others from industry such as LafargeHolcim Foundation for Sustainable Construction.

The majority of roads in Rwanda are mere dirt lanes with large potholes and mud tracks. Trucks, 4 x 4 vehicles and cars frequently break down and the estimated time of arrival of cargo is often determined in days, rather than hours. With its inadequate road and rail infrastructure, wide-open spaces, favorable regulatory bodies and relatively quiet skies Rwanda is highly suited to operating cargo drones.

Norman Foster has expressed his belief that RedLine drones can reduce transport constraints and create better links between regions and among remote communities and deliver consignments, such as critical medical supplies, in one twelfth of the time of a Land Rover.

Small helicopter-type drones with little payloads and limited ranges are useful for photography, surveillance and perhaps so-called ‘last-mile’ (final) delivery in highly developed places with good infrastructure. But they would be ineffective in such a complex infrastructure as Rwanda.

RedLine’s fleet of fixed-wing drones have a 10 feet (3 meter) wingspan, 22 lbs (10 kilogram) payload and 31 miles (50 kilometer) range. These drones will transport emergency cargo; primarily blood to treat malaria of which 450,000 people die every year in Africa, sickle cell disease, which results in more than 100,00 deaths each year and blood for transfusions for mothers during childbirth – more than 60,000 mothers die each year due to bleeding and lack of access to blood.

Once the initial network of RedLine drones is operational, the plan is to introduce the BlueLine fleet of larger drones with a 20 feet (6 meters) wingspan, 220 lbs (100 kilogram) payload and 62 miles (100 kilometer) range by 2025.

The idea is that in the long term BlueLine will help subsidize RedLine’s humanitarian activities by carrying commercial cargo for fee-paying clients.

DronePort more than a hangar for drones

With a rapidly growing population Africa is facing exponential growth that is set to double to 2.2 billion people across the continent by the year 2050. In particular Rwanda also faces the prospect of up to 70 percent youth unemployment.

With this in mind the architects have designed the DronePorts with a unique structure so that minimum products are imported and the maximum materials and building construction is done locally leading to short and long-term sustainable development and employment in the local community.

In addition for a place to operate, build and repair the drones, Foster envisions DronePorts will become a catalyst for other industries to develop and prosper, such as e-commerce, health care and education facilities, he hopes the ports will have a strong civic presence, based on sharing and multiple uses where marketplace and community centers will flourish.

A full-scale prototype of the DronePorts was built in May 2016 at the 15th International Architecture Biennale. The buildings construction, with bricks made from stabilized earth, a reliable, affordable and environmentally friendly building material, which does not require intensive use of fuel, was filmed to serve as a model for replication by local communities in emerging economies.

The Norman Foster Foundation is working on creating a ‘SolarBrick’, which could be incorporated into the structure of the droneport vaults. The ‘SolarBrick’ will have solar cells on its outer surface, charging a long-life battery and then powering a LED lamp on the inner surface.

The innovative design of the DronePorts has been designed with the goal of ensuring the drone is capable of delivering cargo and urgent medical supplies quickly and cheaply top overcome the limitations caused by poor infrastructure.

Foster and Lagard both believe Africa will be the first continent to adopt flying robots for cargo at a massive scale.

It’s not technologies that change the world it’s the people who implement and use them.

 

Additional links to articles, photos and videos

http://www.fosterandpartners.com/news/archive/2015/09/proposals-for-droneport-project-launched-to-save-lives-and-build-economies/

http://www.fosterandpartners.com/news/archive/2016/05/norman-foster-s-droneport-prototype-goes-on-show-at-the-venice-biennale-2016/

http://afrotech.epfl.ch/page-115280-en.html

http://afrotech.epfl.ch/page-93293.html

The future is looking up for Insurance companies and drones

InsuranceDrones

 

The existence of new drone regulations hasn’t dampened the appetite of prospective drone users for commercial purposes. There’s a ground swell of commercial users looking to get permission for drone use in areas as diverse as retail deliveries, agriculture crop spraying, real-estate sales, commercial photography and filmmaking, search and rescue operations, and oil spill monitoring and an abundance of other sectors.

Governments’ approval is seen as a first step in unleashing a potentially multibillion dollar industry that so far has been largely limited to military and law enforcement applications and more recently monitoring of pipelines along Alaska’s northern shore and energy lines of the National Grid in the UK.

As regulations are clarified and ratified one industry that has seen early adoption of drones is the Insurance sector. In a recent report[1] by PwC, the global audit and consulting firm estimates:

The addressable market of drone powered solutions in the insurance industry at US$ 6.8 billion.

There are three areas where drone operations can enhance an insurer’s procedures: risk monitoring, risk assessment and claims management

Claims management

After a natural catastrophe, a drone could reach a remote scene much faster than a claims adjuster.

The largest insurance loss event globally in 2015, of both natural and man-made disasters, was the two explosions at the Port of Tianjin in China, which triggered property claims of between US$ 2.5 to US$ 3.5 billion according to reinsurance company Swiss Re. This was also the largest man-made insured loss event in Asia ever recorded.

The Tianjin explosions have presented insurers with a number of challenges, not least lack of access to the affected area to assess the full extent of damage and resulting insurance claims.

According to a report[2] from insurer Swiss Re:

Drone and satellite imagery have helped loss assessment (at the Port of Tianjin). Drones were sent in to take pictures of the disaster site immediately after the explosions.

These images were compared with satellite images of the site taken prior to the event.

The comparison provided a view of the extent of destruction, and also of the high number of vehicles and containers on the site at the time of the explosion. Initial loss assessments have been based on this information.

This would not have been possible without drones because of the 3 kilometers (1.86 miles) radius exclusion zone enforced at the site. The alternative would have been to wait until the exclusion zone was relaxed and use manned aircraft to take pictures after the event from high altitude, which would have been more expensive and may not have produced the same quality images.

Drones have the advantage of being small, low-cost and able to closely survey and photograph large areas more efficiently. Damaged areas such as Tianjin may not be visible by satellites and manned aircraft, for example due to dust cover, or may be inaccessible for first-hand human inspection due to contamination or transport outages after a disaster event.

Another example of where drones are now being deployed to areas unreachable by claims adjusters is in a flood zone. In December 2015, drones were used to take pictures over Cumbria in the UK after large areas were flooded due to Storm Desmond.[3] The images allowed for better response planning, and loss adjusters used them to identify the worst- affected areas and properties for which claims were reported, which in turn facilitated initial claims reserving.

Significant cost savings

AXA Group, the world’s largest insurer with revenues approaching US$ 100 billion and a recently released strategy to become a leader in digital and technological insurance is carrying out trials of drones in France and Belgium. The company says[4]:

Drones fly over inaccessible damaged areas to gather images or videos, which are immediately sent to remote claims adjusters so they can update clients on the loss, trigger communication and potentially advance payments to clients. Using drones can therefore increase trust and transparency and improve the customer experience.

Besides the speed of deploying resources and payments to those insured, the cost savings to insurers could be significant. No longer must underwriters travel in person to inspect the exterior of a building or property. Details of a risk could be validated without incurring travel costs or costs to make in-person inspections.

After a claim is filed, an adjuster could dispatch a drone to investigate the claim. Instead of climbing a ladder to inspect an icy patch of a damaged roof, a claims adjuster could dispatch a drone to conduct the inspection.

Drones can also survey objects from the side rather than just from above, and can facilitate 3D reconstruction of an environment using stereoscopic cameras. These are valuable inputs for improved damage assessment.

Drones could certainly save insurance carriers the costs associated with claims’ adjusters’ worker’s compensation claims.

Drones provide underwriters and claims personnel with a safe, cost-effective alternative to physical inspections.

There are many obstacles still to overcome, privacy issues, data protection, nuisance, physical or bodily harm. These obstacles present a new opportunity to insurers – as individuals and companies obtain Certificate of Authority to fly drones, to become drone pilots, these individuals and companies will also require insurance coverage for their drone activities. A study[5] commissioned by the European Commission found that drone operations do carry the potential to generate liability claims requiring lengthy and complex legal proceedings.

While insurance company use of, and indeed insurance coverage for, commercial drones is “up in the air,” there’s no question that the drone market is a key growth area.

 

 

 

[1] PwC Global, Clarity from Above May 2016 (https://www.pwc.pl/pl/pdf/clarity-from-above-pwc.pdf) Last accessed July 5th, 2016

[2] Swiss Re, Sigma Number 1/2016 “Natural catastrophes and man-made disasters in 2015”

[3] “Drones will transform loss adjusting”, Insurance Day, January 2nd, 2016 
(https://www.insuranceday.com/news_analysis/special_reports/drones-will-transform-loss-adjusting.htm) last accessed July 5th, 2016

[4]Axa Drones Start-in 2016 (https://www.axa.com/en/newsroom/news/start-in-2016. Last accessed July 5th, 2016

[5] Steer Davies Gleave for European Commission, 2014. Study on the Third-Party Liability and Insurance Requirements of Remotely Piloted Aircraft Systems (RPAS) (https://www.eurocontrol.int/sites/default/files/ec_rpas_final_report_nov14_steer_davies.pdf) Last accessed July 5th, 2016

Picture credit Brian Moore Draws Creative Commons

 

 

 

Drones are set to add hundreds of thousands of jobs to the world economy

BBC drone pilot and jobs

 

One of the most read articles on Robotenomics is Five areas in Robotics and their economic impact. The first area in the article I cited is drones. Subsequent client research reports by Robotenomics and articles, such as this one on Amazon’s drones have qualified the employment growth for drone pilots. The BBC have a nice summary of job projections which is well worth a read…

Globally, the world market for piloted drones is forecast to more than double by 2022 and be a 4bn euros ($4.37bn) business per year, according to a European Commission impact assessment report issued in December in conjunction with its proposal to gradually create a legal framework for the safe operation of drones. Europe would represent about 25% of the world market, translating into some 150,000 jobs by 2050.

and…

For the next 40-50 years there’s going to be guaranteed jobs,” for those with special skills as a drone pilot or systems engineer

 

 

 

 

 

 

 

 

NASA Drone Traffic Management & other reads in robotics

Beep Beep here come the robots

 

Drone Traffic Management

This is actually quite a big deal – could new jobs be created in Drone Traffic Control?

NASA recently successfully demonstrated rural operations of its unmanned aircraft systems (UAS) traffic management (UTM) concept, integrating operator platforms, vehicle performance and ground infrastructure.

With continued development, the Technical Capability Level One system would enable UAS operators to file flight plans reserving airspace for their operations and provide situational awareness about other operations planned in the area. (NASA Ames Research Center)

Bookshelf: Here Come the Robots

Just when I’ve been thinking about creating a robot book for children along come three!

Heavy construction machinery — bulldozers, diggers, tractors and the like — seem to have cornered the market when it comes to mechanical objects that can be made into emotionally responsive, strikingly human characters in children’s books. But what about the robots? Here in the 21st century, when our vacuums are de facto robots and our cars may well soon be too, when certain parents are as likely to dream of their child learning to code as they are to dream of their child learning Mandarin, shouldn’t robots be getting more picture-book love? (New York Times)

Opening Pandora’s AI Box in Oxford

About three months ago, Dr Simon Stringer, a leading scientist in the field of artificial intelligence at the Oxford centre for theoretical neuroscience and Artificial Intelligence, fell down some stairs and broke his leg.

The convalescence period proved unexpectedly fruitful.

Freed from the daily rigmarole of academic life, you see, Dr Stringer’s mind was able to wander. And so it was, when he least expected it, that the solution to one of the biggest challenges in artificial intelligence — the so-called binding problem — struck him out of the blue. (Iza Kaminska at FT Alphaville)

Will artificial intelligence bring us utopia or destruction?

An interesting (long read) discussion featuring Nick Bostrom’s work on AI and SuperIntelligence.

Can a digital god really be contained?

He (Bostrom) imagines machines so intelligent that merely by inspecting their own code they can extrapolate the nature of the universe and of human society, and in this way outsmart any effort to contain them. “Is it possible to build machines that are not like agents—goal-pursuing, autonomous, artificial intelligences?” he asked me. “Maybe you can design something more like an oracle that can only answer yes or no. Would that be safer? It is not so clear. There might be agent-like processes within it.” Asking a simple question—“Is it possible to convert a DeLorean into a time machine and travel to 1955?”—might trigger a cascade of action as the device tests hypotheses. What if, working through a police computer, it impounds a DeLorean that happens to be convenient to a clock tower? “In fairy tales, you have genies who grant wishes,” Bostrom said. “Almost universally, the moral of those is that if you are not extremely careful what you wish for, then what seems like it should be a great blessing turns out to be a curse.” (New Yorker)

Five weekend reads in robotics, AI, driverless cars and the economy

  1. The Phenomenology of Self-Driving Cars — why I imagine driverless cars are going to hit a much bigger obstacle than most. (Next New Deal – The Roosevelt Institute, H/T @RobertWent)
  2. Robots that understand — DeepMind, the UK artificial intelligence group purchased by Google earlier this year, has revealed plans to create a broad alliance with the University of Oxford after acquiring two companies spun out of computer science projects at the elite academic institution. According to the Financial Times one of those companies: “is developing systems capable of the visual recognition of objects in the real word. This means, for example, giving robots three-dimensional awareness that can allow them to understand how a cup sits on a table.”
  3. CyPhy Works’ New Drone Fits in Your Pocket, Flies for Two Hours. Anybody who’s ever flown a rotary wing drone will look at the stats of CyPhy Works’ new Pocket Flyer drone and be amazed. It fits in your pocket and weights a mere 80 grams. It’ll fly continuously for two hours or more, sending back high quality HD video the entire time. What’s the catch? There isn’t one, except for the clever thing that grants all of CyPhy’s UAVs their special powers: a microfilament tether that unspools the drone and keeps it constantly connected to communications and power. (I’m a huge admirer of CyPhyWorks)
  4. The first example of a robot automating surgical tasks involving soft tissue. “There are no bad robots, there are just bad surgeons.” New Research Center Aims to Develop Second Generation of Surgical Robots.
  5. Robot project envisions factories where more people want to work. Rather than taking jobs, robots will one day soon join people on the factory floor, as co-workers and collaborators. That’s the vision of a EUR 6.5 million project led by Stockholm’s KTH Royal Institute of Technology. (PHYS.org)

5 Weekend reads in robotics, drones and their economic impact

BCG Rise of Robotics

Inside Google’s Secret Drone-Delivery Program

This may sound crazy. This may be crazy. But Google is getting serious about sending packages flying through the air on tiny drones. And this is how that happened.

The Rise of Robotics (Boston Consulting Group)

Spending on robots worldwide is expected to jump from just over $15 billion in 2010 to about $67 billion by 2025.

Artificial Intelligent System Creates Descriptive Sentences Directly From Videos

Summarizing what is going on in a video is another task that may soon be done automatically thanks to work done through the Video In Sentences Out study. Using artificial intelligence deep learning methodology, a team has already been able to achieve accurate results in almost half of the videos the system has examined.

Unmanned Cargo Aircraft

The American Federal Aviation Administration predicts that in forty years’ time, some 40% of air cargo will be transported by unmanned aircraft.

Artificial intelligence must be possible. What’s holding us up?

The field of ‘artificial general intelligence’ or AGI — has made no progress whatever during the entire six decades of its existence. Despite this long record of failure, AGI must be possible.

Investments in robots and drones on the up – creating new jobs

Working together

In 1850 the French economist Frederic Bastiat published an essay titled: That Which is Seen, and That Which is Not Seen. The essay is most famous for introducing the concept of ‘opportunity cost,’ the limits, alternatives and choices – to obtain more of one thing, we give-up the opportunity of getting the next ‘best thing,’ or because we “can’t have it all,” we must decide what we will have and what we must forgo. That sacrifice is the opportunity cost of the choice.

Many argue that opportunity cost is applied in business, once the cost of marginal labor rises too high, it makes more sense to replace minimum wage jobs with robots or other automated technology – leading to increased production and profits.

Of course this is not a new phenomenon. In his 1850 essay, Bastiat wrote:

“A curse on machines! Every year, their increasing power devotes millions of workmen to pauperism, by depriving them of work, and therefore of wages and bread. A curse on machines!

This is the cry which is raised by vulgar prejudice, and echoed in the journals… machinery must injure labour. This is not the case.”

It is a cry echoed in media today, just as it was 164 years ago – 164 years during which humans have seen the greatest advancement of technological progress, resulting in more luxury goods, improved health, longer life expectancy, better housing, and sanitary, clean water, electricity, instant communication around the globe via the Internet for free, mobile phones, planes and automobiles, heart transplants, and so on. Ninety nine percent of the poorest people in the ‘developed world’ have amenities that the wealthiest people of Bastiat ‘s time could not imagine.

Machinery does reduce some labor, but as Bastiat points out new labor from new industries is quickly created. The very industry, robotics, that is said to be eliminating jobs is in fact creating hundreds of thousands of jobs.

According to the European Union Commission, by 2020, service robotics could reach a market volume of more than 60 billion euros per year, and are forecasting 240,000 new jobs in the EU alone, backed by an investment of Euro 2.8 billion during this period.

The International Federation of Robotics has reported that Robotics will be a major driver for global job creation creating more than one million jobs by 2016.

Many of these new jobs will come from investments into the Robotics sector which is currently experiencing a major boost.

Startup Robotic companies like Jibo blasted through their crowd funding campaign raising $1,270,193 in a matter of days against a goal of $100,000. Much of the investment will allow Jibo to recruit new staff as the company delivers its artificially intelligent robot helper.

Another robotics startup, Airware the drone manufacturer raised an additional $25 million series B round on top of the $12.2 million it raised in it’s A series round. The company said it had raised the new funding: “to build out its staff.”

The South Korean government is mooted to invest $2.5 billion US dollars by the end of 2018 in joint projects with robotics companies, creating more jobs and targeting more than $6 billion US dollars in annual sales.

Investors are flocking to stock listed robotic companies in the US and also in China, whose manufacturing sector has a healthy appetite for all things robotic.

Japan is building a huge drone fleet. The country will invest ¥3 billion (approximately $372 million) in the coming decade to drastically expand its military unmanned aerial vehicle (UAV) program.

An estimated $6.4 billion is currently being spent each year on developing drone technology around the world, according to a report published earlier this month by the Teal Group Corp.

Whilst jobs will disappear, there are literally hundreds of companies and governments investing tens of billions of dollars in drones and robotics and in doing so creating a significant number of new jobs.

The current generation of engineers and roboticists are making science fiction stories of magical realism come true and creating millions of jobs in the process. As Bastiat put it: “to curse machines is to curse the human mind.”

Update – see also GE Reports on the Cyborg Workplace.

5 Reads: Drones, Robots, jobs and the economy

Drones the wall street journalDrone Dogfight: Big Defense Firms vs. Techies — The users and makers of smaller drones are focusing their frustration with the FAA onto larger drone makers, who aren’t in such a hurry for rules. (The Wall Street Journal)

Humans 1, Machines 7 — It is easy to underestimate how quickly robotics is improving. (The Economist)

The computerisation of European jobs — Who will win and who will lose from the impact of new technology onto old areas of employment? H/T Robert Went (Link to article Bruegel)

The Rise of the Robots — What impact will automation – the so-called “rise of the robots” – have on wages and employment over the coming decades? (Project Syndicate)

Even greater workplace disruption lies ahead. Labor markets may once again be entering a new era of technological turbulence and widening wage inequality. (Project Syndicate)

6 reads in AI, Robots, Drones and Economics

This is an excellent response to a post by Marc Andreesen – What you left out was the essential question: who owns the robots? (By Alex Payne)

Microsoft Unveils Machine Learning for the Masses (New York Times)

AI’s dueling definition: Why my understanding of AI is different from yours. (O’Reilly Radar)

More Robots won’t mean fewer jobs (Rodney Brooks on Harvard Business Review)

Before you travel to a city why not see how it looks from the air? (Travel By Drone)

Our Work Here is Done: Visions of a Robot Economy (Free eBook by Nesta). Contributors: Ryan Avent, Frances Coppola, Frederick Guy, Nick Hawes, Izabella Kaminska, Tess Reidy, Edward Skidelsky, Noah Smith, E. R. Truitt, Jon Turney, Georgina Voss, Steve Randy Waldman and Alan Winfield.

The economics of Amazon’s delivery drones

prime-air_high-resolution01

Last December there was a lot of skepticism when Jeff Bezos, CEO and founder of Amazon, announced on the 60 minutes TV program that they were looking into using drones for delivering small packages. Many pundits called it a publicity stunt and nonsense! — timed for the biggest online shopping day of the year .

Bezos on the other hand was bemused and took pains to point out in his 2013 annual letter to shareholders that Amazon are serious about delivery by drones, writing: “The Prime Air team is already flight testing our 5th and 6th generation aerial vehicles, and we are in the design phase on generations 7 and 8.”

On their Prime Air Q and A page Amazon anticipate FAA’s rules for commercial drones will: “be in place as early as sometime in 2015.” And state: “We will be ready at that time.”

To be ready they are assembling a team said to already consist of between 45 to 50 employees and at least 10 additional personnel sought according to job openings on Amazon’s website.

Job postings for the Prime Air team range from a Patent Lawyer, to a Communications Manager, Software Engineers, Machine Learning Engineers, Executive Assistant, Project Coordinator, Research Scientist and Technical Program Manager.

To give you a taste of what the company is aiming for, the Communications Manager post indicates:

We’re looking for a communications leader for Amazon Prime Air, a new delivery system that will get packages into customers’ hands in 30 minutes or less using unmanned aerial vehicles.

So what’s driving Amazon’s Prime Air initiative?

Instant gratification from customers is clearly one element; providing outstanding service is another; as is staying ahead of the curve with innovative delivery and order fulfillment. All highly significant points in their own right to meet Amazon’s goal: “to be Earth’s most customer-centric company.”

Cost of transportation is another. Amazon’s total shipping costs in 2013 were $6.635 billion. They received shipping revenue of $3.097 billion and incurred overall losses of $3.538 billion related to shipping costs.

Amazon shipping costs

Amazon use several services for shipping, UPS, FedEx, US Postal, and others as well as developing their own City Pick Up points, delivery van service and Amazon courier cycles. Shipping is clearly a major cost factor to Amazon and one where they are focused on improving service whilst reducing cost.

Technical difficulties

In addition to the regulatory hurdles that must be overcome there are many technical difficulties.

Amazon is aiming for their drones to deliver shoebox size packages.

They probably do not want video onboard due to the extra weight on the drone and also privacy concerns, so will need another way of identification before customers can accept delivery, e.g. biometric identification or pin code to release the package provided with the consignment email – package drop off will be a challenge.

Wind will be a factor in delivery.

Sense and avoid – very few of the current breed of drones (especially the hobbyist drones) have sense and avoid capabilities and should not be flown where there are people or objects.

Amazon will want their drones to be as safe as regular manned planes. Piloted planes have 9.4 accidents per million flights, in other words statistically very safe.

CyPhy Works is possibly the leader in this drone technology with their tethered drones having already developed high payload, high wind, environmentally sealed systems.

GPS lock is an issue that has caused drones to drop out of the air and piloting inexperience is also a major issue, although one the FAA is looking very closely at and I’m sure Amazon will too – drones should never be operated without formal training and some license arrangements.

Another hurdle will be location for dispatch – most of Amazon’s Fulfillment Centers are outside major cities, although it is probable that the items Amazon will provide via Prime Air will be a vastly reduced inventory and kept at the Amazon Pick Up points or smaller Fulfillment Centers closer to major city centers.

These are just a few of the technical hurdles, not insurmountable and as Amazon state they will be ready when the FAA approve the use of commercial drones.

Will drones be more cost effective?

According to shipping-industry analysts Amazon typically pays between about $2 and $8 to ship each package, with the cheapest option through the Postal Service and the most expensive via UPS or FedEx.

Amazon may be able to get a premium price for the Prime Air delivery service – customers who want their package within 30 minutes may be prepared to pay a premium of say $15 to $20 per delivery. Irrational for a book that costs $18, but as behavioral economics shows humans do not always act rationally.

During a 15 hour window (7am to 10pm) one Prime Air drone could potentially make 30 deliveries (absolute maximum efficiency and at a significant stretch).

Assume the drones are fully in service for 360 days per year, this will be the equivalent of 10,800 deliveries per drone.

The drones will require 2 full time pilots. With drone pilot wages ranging between US$13 to US$23 per hour, plus fulfillment center costs, insurances, drone fees and service, the Prime Air Team overheads and development – the annual fees per Prime Air drone service – annual cost per drone could be a minimum of between US$105,000 to $186,000 per year.

Those numbers divided by the maximum number of deliveries per drone indicate that the Prime Air service could cost Amazon between $9.75 and $17.44 per delivery, which is okay if Amazon get a premium rate for 30 minutes delivery.

Amazon will want to get maximum number of deliveries and efficiencies out of the drone capabilities, whilst reducing the costs as close to $2 per delivery as possible and maximizing the revenue by providing the wow factor to customers. They will also be aiming to reduce the US$ 8.829 billion in cumulative shipping losses in the last three years.

At some stage don’t be surprised if Amazon seeks to move into the logistics business. The robots that they are deploying in their fulfillment centers and now with Prime Air Drones, Amazon are clearly building a high quality, high capability logistics service – and ultimately that is good news for consumers.

Photos: Amazon 2013 Annual Report and Amazon Prime Air Q&A

As Helen Greiner, CEO and founder of CyPhy Works says: “The shortest path between two points is as the drone flies.”

Updated: There is an interesting take on this article edited by Business Insider — The 4 reasons Amazon is dead serious about its Drone delivery service.