Amazon Air has taken delivery of its 40th plane and could be looking for more as the e-commerce giant expands its US logistics network with a new sorting centre at Wilmington Air Park, in Ohio.
In 2016, Amazon announced plans to create a dedicated fleet of 40 B767-300 freighters over the following two years to fly its goods across the US to speed up deliveries. Under the terms of agreements with Atlas Air and ATSG, the two US cargo-carrying airlines would each supply and operate 20 planes on behalf of the company under 10-year contracts.
ATSG put 20 planes into operation for Amazon by August 2017 while Atlas yesterday delivered the final and 20th aircraft in its supply contract with the company. A 40-strong Amazon Air fleet is therefore in place as scheduled ahead of the peak US holiday shopping season.
Atlas Air president and CEO, William J. Flynn, described the delivery of 20 aircraft to Amazon over the last 28 months as “a significant achievement", adding: “E-commerce is the fastest growing air cargo segment, and we are excited to continue our partnership with Amazon as it delivers innovative service to its customers."
Amazon generates sizeable revenues for both Atlas Air and ATSG and has close ties to the two cargo airlines. It has options to buy up to 30% in Atlas Air parent company AAWH over the next 12 years and has similar options to buy up to 20% of ATSG shares. Atlas Air Worldwide Holdings owns Atlas Air, Southern Air, Titan and Polar Air Cargo, while ATSG’s main subsidiaries are ABX Air and ATI International.
Amazon could be looking to expand its air fleet further next year as its volumes continue to grow at high double-digit rates.
One US media report quoted a senior executive at an aircraft lessor who said Amazon was “shopping around” for more B767 freighters and had put out a request for proposals for an additional six jets earlier this year. But the article said it was unclear how far Amazon was in that process as a company spokeswoman had declined to comment.
According to experts, a potential obstacle in Amazon's drive to secure more aircraft is that B767 freighters are in a relatively short supply as a result of a lack of used passenger models available for conversion and also the prolonged strength of air cargo markets. It could decide therefore to seek an alternative in the shape of the A330 freighter which Airbus is said to be contemplating bringing into production.
In a related development, Amazon is to return to Wilmington Air Park, in Ohio, where it carried a pilot operation a couple of years ago, as it continues to build-out its US air operations. The new operation will include daily flights and an on-site facility to sort packages bound for their next destination, several US media reported. Operations are expected to begin in June or July next year and could lead to the creation of 300 new jobs.
Sarah Rhoads, director of Amazon Air, was quoted as saying: "We are excited to bring our Amazon Air operation to KILN (Wilmington Air Park) while we continue building out our central air hub at the Cincinnati/Northern Kentucky International Airport. We are opening an operation in Wilmington to ensure we have the capacity to continue to delight our customers".
In early 2017, Amazon announced plans to build a new air cargo hub at Cincinnati/Northern Kentucky Airport (CVG) with the investment amounting to nearly $1.5 billion. Last month, Amazon Air launched a double-daily freighter service at Miami International Airport (MIA) to unspecified destinations across the US.
As for Amazon's airlift provision in Europe, earlier this year there were reports that Ireland-based ASL Aviation Group, which acquired TNT Airways and its fleet of cargo aircraft in 2016, could establish closer ties with the online retailer, operating a number of aircraft on their behalf.
CEO Hugh Flynn told local media that the group’s business with Amazon had begun quietly but he was hoping it would develop to a point where ASL was flying 10 aircraft on a regular basis for the US giant. He explained that currently ASL Aviation was providing Amazon with airlift mainly out of Poland to the UK and Italy to the UK. Its services for Amazon and understood to use converted B757 aircraft.
Also earlier this year, a media report claimed that Amazon was in talks with Brazilian airline Azul – which serves over 50% more Brazilian airports than its nearest rival – on shipping goods in the country. It noted that this was the strongest signal yet that the company was lining up distribution to sell products directly to consumers throughout Latin America’s largest economy.
