Amazon started its Air cargo operations in 2016 to reduce its reliance on third-party carriers like UPS and FedEx for its deliveries to its customers. However, the trend of online shopping kept increasing and Amazon’s in-house logistics operations were proving to be of great value when the coronavirus pandemic hit the world. Online shopping and e-commerce accelerated like never before as people who were bound in their homes started relying on Amazon for essential and non-essential items too. This prompted the company to expand its air cargo fleet and add more planes to it.
Amazon decided to buy the jets as the airline prices plummeted amidst the pandemic.
This was a major reason that pushed Amazon to make this decision to buy jets instead of relying on leasing contracts. It is a smart move as it will make deliveries faster, more efficient, and operations smoother than ever before.
The prices of aircraft declined during the pandemic as the traveling industry suffered a major blow owing to the pandemic. As the air operations and traveling decreased, the airlines started plummeting towards loss. While this was a dreadful situation for the airlines, it turned into a boon for Amazon.
The prices of Boeing 767-300 ERs declined by 15% by mid of December in comparison to early 2020.
Although Amazon, Delta, and WestJet have not revealed the prices at which these 11 jets were purchased, according to Rob Morris, a consultant at Ascend by Cirium which is an aviation consulting firm, Delta’s jets are almost around twenty years old. Adding all their maintenance costs, their value is around $13 to $14 million each.
The pandemic made Delta and other airlines decide on selling off their aircraft to cut down their maintenance costs. In June 2020, Delta had revealed their plans of retiring seven of their 767-300 ER planes, which we now know have been sold to Amazon. But in October, Delta again announced that they plan to retire all of its remaining forty-nine Boeing 767-300ER aircraft by 2025.
Amazon’s Plans For The Future
The company has announced that it plans to have more than eighty-five planes in its air cargo fleet by the end of 2022, and around two-hundred aircraft by the end of 2028. The fleet will have both leased as well as bought planes.
The vice president of Amazon Global Air, Sara Rhodes has said that it is going to be a good practice to have a mixture of both leased and owned aircraft in Amazon’s expanding fleet. It will help the company operate in a better way and it will also help them to keep pace with meeting their customer promises and expectations.
Amazon’s 767-300 fleet of aircraft is operated by Atlas Air Worldwide Holdings and Air Transport Services Group. It is not known yet if the newly bought planes will also be operated by the same services or not?
Experts believe that Amazon has been providing excellent customer-centric services at a global scale, and now, with its steps towards its own freight services, it will become a very tough competitor for logistics giants like FedEx and UPS within a few years. The way it plans to continue expanding its air cargo fleet, it is very likely that it will soon start making deliveries outside America too, and will very soon mark its position as an independent carrier around the world.
A potential threat for the existing logistics companies?
Damien Brett, the editor of Air Cargo News has said that at the moment, Amazon is not directly competing with other logistics companies as its aircraft are being used to make its own deliveries. However, if Amazon decides to extend its services to third parties, then it will become a threat to the existing freight companies.
I’m Ava Paul, an experienced news website author with a special focus on the entertainment section. Over the past five years, I have worked in various positions of media and communication at World Stock Market. My experience has given me extensive knowledge in writing, editing, researching and reporting on stories related to the entertainment industry.
