140 flights a day, a 15% growth in flight activities over the past 6 months, and further rapid expansion to come both in the sky and on the ground. These are some of the seven key findings detailed in the latest Chaddick Policy Brief entitled “Primed & Positioned: Strategic Moves by Amazon Air - Winter 2021” and published by DePaul University on 16FEB21.
If you thought you’d heard the last of the word “unprecedented” now that 2020 is over, you’d be wrong. It certainly applies to the rapid expansion of Amazon Air’s air cargo fleet and
operations, which – going by the above-mentioned report – will have doubled in size by JUN21, compared to MAY20. Spring is when growth happens, and that definitely includes Amazon Air. The report
forecasts a “growth spurt”, with the airline upping its average daily flights from 140 to more than 160 by the summer as it adds more aircraft. In MAY20, it was averaging 85 daily flight
and by AUG20, this had already leapt to 122 flights per day.
Buy, convert, fly!
The fact that e-commerce was one of the main winners of the pandemic last year is nothing new, yet Amazon’s consistent expansion focus is phenomenal. Much of the report concentrates on its U.S. plans and activities, and outlines that though “Amazon Air’s domestic operations will remain small compared to FedEx Express and UPS,” stating that its “domestic network would still be only about 15% as large as UPS’s […, its] rapid growth rate sets it apart from nearly all other established cargo airlines.” That growth includes the acquisition of more B767, the company’s “workhorse” over in the States. It has been adding aircraft every month since SEP20, of which 10 are currently not flying (partly being converted in Mexico and Israel), 4 set to come soon, and a further 11 are being bought from Delta (7) and WestJet (4). “We anticipate that seven or eight planes registered to Amazon will likely begin service by JUN21, pushing the fleet of active planes under its registry to 66 or 67, which, together with more intensive utilization of existing planes, sets the stage for another growth spurt, like that occurring last summer.” That said, it does own one of the oldest fleets in the business with an average age of 24 years (status OCT20), so it has its work cut out when it comes to sustainability.
One report result is that “Amazon Air has reduced transpacific flights and appears to be relying almost entirely on charters and other contractual arrangements to support its supply chain across the Pacific. Offseason transoceanic international flying has been largely reduced to a semi-regular roundtrip between Amsterdam and Chicago.” The company’s strategic focus is on achieving its 1- and 2-day Prime delivery targets, and it is therefore concerned with setting up more autonomous domestic networks to best link its warehouses and fulfillment centers, optimizing on inventory and packaging processes whilst continuing to rely on the services of conventional cargo carriers (such as Atlas Air) for the longer, international flights. Interesting to note: unlike its integrator peers, Amazon Air flights are mostly daytime flights – 70% take place between 06:00 and 22:00.
European air expansion
Before detailing all the hub and airport expansions that Amazon has been pursuing and is planning over in the U.S., the report’s first finding focuses on Europe, forecasting further growth throughout the area. “Among Amazon Air’s most significant developments of the past year, is the emergence of intra-Europe operation serving four countries, using planes registered under the Amazon Air name.” Since OCT20, the four countries in question - Germany, Italy, France, and Spain - are served with 2 ASL Ireland Airlines B737-800 aircraft carrying out four flight segments a day “between seven cities. One plane regularly makes a morning Cologne, DE – Milan, IT roundtrip followed by a Cologne – Madrid, ES roundtrip that same day. The other is often dispatched on Leipzig, DE – Barcelona, ES – Rome, IT.” A third ASL plane “will likely enter service soon.”
European hub expansion
OCT20 also saw Amazon Air start work on building its own hub at Leipzig/Halle Airport, handling its own aircraft, providing its own ground services, and acting more like an own airline. Yet Leipzig – which has good potential connections to Poland and the Czech Republic, currently only sees two flights a day, whereas Cologne (linking Western Europe, but “significantly” not overlapping Amazon’s USA-NL connections, and leaving out Benelux, the UK and Ireland in its current “skeletal” set-up) welcomes four daily flights, leading the analysts to predict “that both Cologne, a hub for United Parcel Service (UPS) and Leipzig, a hub for DHL, will emerge as bona-fide hubs for Amazon Air, with the latter seeming poised for more rapid development, over the next year. […], and we expect the network’s growth to be an important development over the next year”, meaning “the addition of new airports in countries not yet served.”
Much of what the report forecasts is expected to come to fruition as early as the end of MAY21, with Amazon Air being “one step closer to being set up to run like an airline,” as the company moves more of its air cargo operations in house for greater delivery flexibility, better cost control, and more autonomy.
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