Amazon Buys Planes For The First Time To Expand Growing Air Freight Network

Amazon Buys Planes For The First Time To Expand Growing Air Freight Network
An Amazon Air Boeing 767-300ER(BDSF) operated by Air Transport International. – Credits: Medessec Via Wikipedia Inc. is buying 11 used Boeing 767-300 planes, the first time to expands its growing air freight network. The online retail giant has purchased, rather than leased, aircraft for its fast-growing air cargo operation.

Amazon’s first air operation launched in 2016, but previous planes have been leased.

The company on Tuesday said it was buying seven aircraft from Delta Air Lines Inc. and four from WestJet Airlines Ltd. The WestJet aircraft are currently being converted from passenger to cargo use and will join Amazon’s fleet this year.

The Delta jets will start flying routes in 2022. By the end of next year, Amazon expects to have more than 85 planes in service, a spokesperson said.

Over the next few years, it’s estimated Amazon’s air fleet could grow to include more than 200 aircraft, putting it in the same size as the one operated by UPS.

Experts say buying its own aircraft will allow Amazon to become a credible competitor in logistics.

Aircraft prices have plummeted over the past year as travel demand diminished amid varying global lockdowns.

Amazon announced it had bought 11 used Boeing 767-300 passenger jets from struggling airlines Delta and WestJet.

“Our goal is to continue delivering for customers across the US in the way that they expect from Amazon, and purchasing our own aircraft is a natural next step toward that goal,” said Sarah Rhoads, vice president of Amazon Global Air.

“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 Air is currently only using its aircraft to transport its own volumes and has yet to sell services to third parties,” explained Damian Brett, editor of Air Cargo News. “While this has resulted in lost revenues for the likes the UPS and FedEx, Amazon is not yet competing with them directly.”

But if Amazon were to start offering air freight services to external parties, it could become more of a threat, he added.

A report by Chicago’s DePaul University last year estimated that Amazon’s fleet was likely to grow to 200 aircraft by 2028.

“At a time when many other airlines are downsizing due to the pandemic, Amazon’s push for faster and cheaper at-home delivery is moving ahead on an ambitious timetable,” said the report. “Amazon Air’s robust expansion makes it one of the biggest stories in the air cargo industry in years.”

However, the report said its network was still less well-developed its competitors FedEx and UPS:

In 2019, Amazon delivered an estimated 2.3 billion packages in North America, largely comprised of goods purchased on its own platform.
That’s compared to 3.1 billion and 4.7 billion total packages delivered – purchased through many different websites – on FedEx and UPS, respectively.

However, analysts at US bank Morgan Stanley – first reported by CNBC – estimated that Amazon would overtake UPS and FedEx in the total volume of parcels delivered in the US by 2022.

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