By Jeff Berman, Group News Editor · September 10, 2020
Various reports issued over the past week have indicated that Seattle-based global e-commerce titan Amazon has purchased a Boeing 767 aircraft.
This marks a shift from Amazon’s longstanding tradition of leasing aircraft from Air Transport Services Group (ATSG), to operate its air cargo network to serve United States-based customers, and Atlas Air Worldwide Holdings, whom provides air cargo services to support Amazon’s package deliveries to its customers.
Amazon officials did not reply to LM for comment at press time.
In early June, Amazon announced plans to lease 12 Boeing 767-300 converted cargo aircraft from ATSG as part of an initiative to meet changing customer needs through the investment in ways to provide fast and free delivery. Company officials said, at the time, that the addition of these 12 aircraft joined its existing fleet of 70 aircraft and brings its total network to more than 80, with one of the new aircraft coming to Amazon Air cargo operations in May and the other 11 scheduled to be delivered in 2021. And they added that the timing of these additional aircraft syncs up well with consumers ordering more goods online, due to the ongoing COVID-19 pandemic, while also noting that Amazon Air has played a “central role” during this time through the transporting of PPE supplies, not only for Amazon staffers but also frontline health workers and relief organizations throughout the U.S.
In a research note, Ravi Shanker, Morgan Stanley transportation analyst, wrote that with the development related to Amazon buying a Boeing 767 aircraft, it is a sign that Amazon appears to be taking an “asset heavy” approach into planes for Amazon Air.
“One of the defining characteristics of AMZNL so far has been its largely asset-light nature, using leases, contracted vendors or owner-operators for dedicated capacity,” Shanker wrote. “We understand that the only real money they have invested into hard assets so far has been for the airport hubs they are building for AMZN Air and the owned trailers for the trucking network. In this light, reports that Amazon Air became the outright owner of a Boeing 767 this month are interesting—a first for the company who has previously relied on leased and charter agreements with the likes of ATSG and AAWW. This is not entirely a surprise but the timing is perhaps earlier than we had anticipated. Following several leased plane additions earlier this summer, this addition will bring Amazon’s total network to over 90 aircraft and continues AMZN Air’s path to 103 planes in its fleet by 2025 (at the latest).”
A report in Simple Flying said that the purchased Boeing 767 joins 36 other Boeing 767s in the Amazon Air fleet, with Amazon also holding 15 737 aircraft.
“Altogether, these two types give the company a well-rounded offering for short, medium, and long-distance operations,” the report said. “Furthermore, it has aligned with other carriers to help take on services under its name. Amazon Air has been expanding rapidly since 2015, and this development is set to continue into this decade. This year has been an extra busy period for the carrier, with the public relying on the delivery of goods and supplies more than ever.”
A noted parcel sector analyst told LM that this development could be the beginning of a trend for Amazon.
“Until last week, Amazon had acquired aircraft assets for its Air network though leases rather than via ownership of aircraft,” said John Haber, Founder and CEO, of Atlanta-based Spend Management Experts. “We believe Amazon will increase their ownership of aircraft moving forward to facilitate greater control of the assets. With the huge growth of e-Commerce from the pandemic, capacity has become an issue across almost all modes of transportation. Asset-based providers are able to charge a premium for space and pick and choose their customers in many cases. Amazon is very familiar with the issues associated with capacity, which is one reason why they continue to move more of their last mile deliveries in-house versus an external provider.”
September 10, 2020