Will Amazon’s air cargo investments take off?
Amazon.com plans to hire Hawaiian Airlines to fly packages on 10 leased Airbus SE jets around the U.S. while taking a stake in the carrier.
In a blog entry, Sarah Rhoads, VP of Amazon Global Air, noted that Amazon introduced its first aircraft in 2016 to help guarantee one or two-day delivery to Prime members.
Over the past two years amid the supply chain crisis, Amazon took on additional leased aircraft. Its fleet now numbers more than 110. The company also launched new air hubs, including at the Cincinnati/Northern Kentucky International and Germany’s Leipzig/Halle Airport.
Said Ms. Rhoads, “It was meaningful to reach so many more customers in different parts of the world during a time when many were relying on us to get them what they needed while they lived and worked from home. Now, when I look at our network, I know that we have the structure we need to be nimble when the expected and unexpected, like Hurricane Fiona and Hurricane Ian, occur.”
Air freight prices have recently been slumping as port congestion has eased and the global economy has weakened.
The 10 Airbus A330-300s, replacing older Boeing 767s, are being converted from cargo planes, and additional planes may be leased. Said Ms. Rhoads, “These A330s will not only be the first of their kind in our fleet, but they’ll also be the newest, largest aircraft for Amazon Air, allowing us to deliver more customer packages with each flight.”
Amazon acquired warrants to purchase up to a 15 percent stake in Hawaiian Airlines, similar to arrangements with other air cargo providers, Air Transport Services Group and Atlas Worldwide Holdings.
Air freight has traditionally been a small part of the overall cargo market, but demand for cargo planes and cargo space on passenger planes is expected to remain elevated versus pre-pandemic levels due largely to growth in e-commerce.
Rob Morris, global head of consultancy at Ascend by Cirium, an aviation data firm, recently told CNBC, “If you look at the e-commerce segment of air cargo, that has grown significantly and that’s probably not going to cycle back because we’ve all learned to acquire things in a different way.”
- Amazon Air adds 10 Airbus A330-300s to its global fleet – Amazon.com
- Amazon to Use Airbus Cargo Planes for First Time – The Wall Street Journal
- Amazon, Hawaiian Airlines gear up for 2023 launch of Airbus freighters – FreightWaves
- Air cargo rates slump but some companies see long-term strength – CNBC
- Ecommerce will boost demand for air cargo, says chief of handler WFS – Financial Times
DISCUSSION QUESTIONS: How much of an edge does Amazon gain from its airplane and air hub investments? Will air freight play a larger role supporting retail’s supply chain in the years ahead?