|Some more details from finanz.dk|
Amazon officially announced a deal today that has been consummated months ago: the purchase of 11 aging Boeing 767-300 jets, seven from Delta that it had retired in the second quarter and four from Canadian airline WestJet, to be converted to freighters and enter operations for Amazon Air.
The four WestJet planes, which Amazon today said it had acquired in March, are now undergoing cargo conversion and are expected to enter Amazon Air operations this near. The seven Delta planes will enter operations in 2022.
On August 31, the FAA had issued a direct registration to Amazon.com Services LLC for the first of the 11 planes, Paxex.Aero reported in early September. The plane had originally entered passenger air service in 1991 for Quantas and for the past five years flew for West Jet. In March, WestJet put it into storage. In mid-August, it was moved to Amazon.
Until this purchase, Amazon had only been leasing its cargo jets. But given the collapse in passenger air traffic, and the many planes parked around the globe, it was time to go shopping.
“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 said in the statement.
In June 2020, Amazon announced leasing an additional 12 converted 767-300 cargo jets from Air Transport Services Group (ATSG), for a ten-year term. One of the planes entered Amazon Air cargo operations in May 2020. The remainder will be delivered this year. That batch brought its leased fleet “to over 80 aircraft.” The purchases announced today will bring its total fleet – leased and owned – to over 90 aircraft.
All of Amazon’s aircraft are operated by third-party air carriers, and the purchased aircraft will also be operated by third-party carriers, Amazon said today.
These third-party carriers include Atlas Air, Sun Country, and ATSG through its subsidiaries such as ABX Air (formerly Airborne Express). Sun Country was bought out by private equity firm Apollo Global Management in 2017. Atlas Air, Sun Country, and ATSG have sold warrants to Amazon, which it still holds, giving Amazon the right to purchase shares of these companies at a set price, and have some influence.
One of Amazon Air’s leased planes, operated by Atlas Air on a regular trip from Miami to Houston, crashed in February 2019 into Trinity Bay, about 30 miles southeast of George Bush Intercontinental Airport. Both crew members and the only passenger were killed. Muscling into the air transportation business is not without risks.
Amazon has moved fast. It started getting into the air cargo business in 2015 with trial cargo runs out of Wilmington Air Park. By December that year, it announced that it would launch its own cargo airline. At the time, it was already negotiating to lease 20 Boeing 767 aircraft.
Now Amazon has two air hubs, one at Cincinnati/Northern Kentucky International Airport and one at Leipzig/Halle Airport in Germany. It has regional hubs and “Gateway facilities” – used for one-day shipping – at airports across the US and in numerous cities around the world. And it will soon have over 90 cargo planes in service. These are starting to be substantive air cargo operations that have come practically out of nowhere.
These air cargo operations complement Amazon’s ballooning empire of ground delivery services and fulfillment centers.
Just over the month of December 2020, effectively in the three weeks from December 1 through 22, Amazon announced eight new facilities: seven fulfillment centers and a delivery station.
December 22, 2020: Announced a new 1 million square-foot fulfillment center in a suburb of Lafayette, Louisiana.December 22, 2020: Announced three new facilities in San Antonio, Texas, a new 1 million square-foot fulfillment center, a new 750,000 square foot fulfillment center, and a new 350,000 square-foot delivery station.December 18, 2020: Announced a 640,000 square-foot fulfillment center in Sioux Falls, South Dakota.December 17, 2020: Announced a new 1 million square-foot fulfillment center in North Little Rock, Arkansas.December 7, 2020: Announced a new 1 million square-foot fulfillment center in Missouri City, Texas, where “associates will work to pick, pack, and ship bulky or larger-sized customer items such as patio furniture, outdoor equipment, or rugs,” in a sign of our times, given the surge of online purchases of these items during the Pandemic.December 3, 2020: Announced a new 1 million square-foot fulfillment center in Oklahoma City, where, you guessed it, “associates will work to pick, pack, and ship bulky or larger-sized customer items such as patio furniture, outdoor equipment, or rugs.”
Fulfillment centers fall under the commercial real estate category, “industrial,” and this category, unlike retail and hotels, has been white-hot throughout the Pandemic, with Amazon being the biggest player in it.
In addition, Amazon has massively expanded its ground delivery operations. One of the elements is perhaps the most visible: The Delivery Service Partners program, under which Amazon helps launch smaller independently owned companies “with up to 20-40 vans,” Amazon-branded vans. These companies are totally dependent on Amazon, with Amazon not only being their only customer, but also the provider of the software services needed for the deliveries, leasing of the vans, etc. I now see those vans in San Francisco all the time. They’re everywhere.