Amazon Buys 11 Jets in a Bid To Expand Its Air Cargo Operations

Amazon expands its growing air freight network by buying its first fleet of planes. Let’s read the complete story.

Last week, Amazon, the global ecommerce giant, announcedOpens a new window that it has purchased 11 Boeing 767-300 aircraft from Delta and WestJet that will join Amazon Air’s network in the coming years. This purchasing activity is a significant step in Amazon’s expansion of its growing transportation fleet. This is the first time an ecommerce player has purchased an aircraft for transportation. Amazon has been fulfilling its airfreight capacity by procuring aircraft through a lease.

According to Amazon, it has purchased seven aircraft from Delta and the remaining four from WestJet. The company plans to deploy these aircraft into Amazon Air’s network by 2022.

Sarah Rhoads, vice president of Amazon Global Air,Opens a new window said, “Our goal is to continue delivering for customers across the U.S. in a way that they expect from Amazon, and purchasing our own aircraft is a natural next step toward that goal,” She further added, “Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which in turn helps us to keep pace in meeting our customer promises.”

Amazon’s Air fleet additions will possibly strengthen Amazon Air’s network and demonstrate its stronger hold over the airways. In the current scenario, as more customers are homebound and rely mostly on deliveries by ecommerce players; this fleet expansion will ensure fast and customized shipping for its users. Keeping the customer demand and satisfaction in mind, Amazon is constantly assessing its transportation fleet and network to analyze what more they need to support fast, free shipping of goods to the customers, as noted by one of the industry observers.

According to the company officials, the aircraft purchased from WestJet in March last year are undergoing passenger to cargo conversion and will join Amazon Air’s network in 2021 if everything goes as per plan. The officials further added that Amazon plans to include the remaining seven aircraft from Delta into its air cargo network by 2022.

“These fleet additions will ensure added capacity in Amazon Air’s network for years to come,” Amazon said in its statement. “The company will continue to rely on third-party carriers to operate these new aircraft.”

Jerry Hempstead, president of Hempstead Consulting,Opens a new window  viewed the fleet expansion activity and Amazon Air’s development as an example of Amazon being Amazon.

“Because of COVID-19 substantially reducing the number of travelers, airlines have taken down aircraft to rationalize their networks,” he said. “The parked planes just eat up cash. So, the airlines have a chance to move them off their balance sheets so they can replace them with new more fuel-efficient planes. Therefore, there are real ‘buys’ on hardware. Originally, Amazon went to third parties like ATSG [and Atlas Air] to acquire the planes and provide the crews to fly them. Now Amazon is taking a more cost-efficient tact and picking up planes on the cheap, then outsourcing the modification and the piloting of the planes. Amazon has not been shy in publicly stating its intentions to build out its fleet and its hub network. Amazon isn’t done building its fleet.” 

Insights into Amazon Air: 2020 Report

According to the May 2020 report on ‘Insights into Amazon AirOpens a new window ‘ by the Chaddick Institute for Metropolitan Development at Chicago-based DePaul University, Amazon Air is determined to enhance its air cargo presence in various ways. Some of the pointers aimed by Amazon Air include:

• Emphasizing more on cargo-only airports in comparison to most other package-shipment providers.
• Orientation towards more daytime flights, along with coordinated point-to-point routes than the competitors like FedEx and UPS.
• Expanding transportation fleet to 70 airplanes by 2021 to have about 200 planes in the coming 7 to 8 years.
• Establishing focal points at Cincinnati (CVG), Chicago Rockford, Ontario, Tampa, and Wilmington (OH).
• Making a CVG mega hub for boosting its potential to act as a multi-purpose delivery provider.

In June last year, Amazon saidOpens a new window that it is leasing 12 Boeing 767-300 converted cargo aircraft from ATSG as part of an initiative to bolster the air cargo fleet and meet dynamically changing customer needs through an investment that will provide ways for fast and free delivery of goods. Amazon officials said in a statement at the time that the addition of these 12 aircraft to the existing 70 aircraft would bring the total tally to 80+, with one aircraft scheduled to join the Amazon Air cargo in May 2020 and the rest 11 are expected to join by 2021.

The officials further added that the additional aircraft added to the existing fleet go well with the current situation and circumstances where consumers are ordering more goods online, due to the ongoing COVID-19 pandemic. The team also stated that Amazon Air has played a “central role” during this time as it transported the PPE supplies, not just for the Amazon staffers but also frontline health workers and relief organizations operating 24/7 throughout the U.S.

In September 2020, various reports hinted Amazon’s purchase of Boeing 767 aircraft, thereby marking a cultural shift in the company’s working model, where Amazon would operate its air cargo network to serve U.S.-based customers rather than the tradition of leasing aircraft from Air Transport Services Group (ATSG) and Atlas Air Worldwide Holdings, which provides air cargo services to support Amazon’s package deliveries to its customers

Amazon vs Other Cargo Companies

To speed up package delivery to customers and provide an alternative to carriers like United Parcel Service Inc., Amazon has rapidly expanded its air cargo operations in recent years, according to BloombergOpens a new window .

As Amazon continues to build its own delivery operation, including tens of thousands of cargo vans, along with the growth in the Amazon Air network, it has emerged as a competitor to partners that only a few years ago delivered almost all of the company’s goods. Until this point, Amazon relied on other cargo companies like FedEx Corp. for the delivery of its packages. In 2019, FedEx Corp. saidOpens a new window it wouldn’t renew its air-delivery contract with Amazon. After the newsbreak, Amazon’s quickly-growing logistics network was all set to get seriously tested in the coming years. However, the company managed to withstand the turmoil, eventually leading to this point where Amazon’s air cargo operations are set to skyrocket after the fleet of purchases.

According to another 2020 report, it is estimated that Amazon’s fleet is likely to grow to 200 aircraft by 2027, which will make it one of the largest cargo fleets in operation behind FedEx and UPS. This development of Amazon is quite significant in comparison to other cargo companies as Amazon operates mostly from smaller, regional airports close to its warehouses, routing packages between locations to accommodate quick delivery, unlike others.

Therefore, the deals announced by Amazon in the last week marks the second time when Amazon has fared well in such a depressed market for aircraft as the COVID-19 pandemic crippled air travel and sent many aircraft into storage. 

In Conclusion

Amazon expanding its fleet support to serve the growing customer base during this pandemic when people continue to rely on receiving items quickly is a significant move as Amazon is on the verge of becoming a top independent and self-reliant company in the ecommerce space. The air cargo development implies that Amazon doesn’t have to rely on third-party logistics companies anymore to move its inventory or deliver its packages. Thus, the air network investment is important for the company’s ability to live up to its promises of same-day delivery.

Do you think Amazon’s investment in its Air network will be able to live up to the expectations of ‘same-day delivery’? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!