The coronavirus pandemic has put airlines in dire peril
Credit: Chad Slattery
Amazon has bought 11 used passenger jets from two struggling North American airlines, expanding its growing air freight operation even as coronavirus wreaks havoc on traditional carriers.
The online shopping giant said on Tuesday that it had snapped up seven Boeing 767-300 aircraft from Delta and four more from WestJet in order to expand its Amazon Air fleet.
The company has rapidly increased its cargo capacity amid soaring demand for quick delivery, and aims to have more than 85 planes, rented and owned, by the end of 2022. It reportedly bought its first aircraft in September.
By contrast, Delta reported a loss of $5.4bn (£4bn) in the three months ending in September, while Fitch downgraded Westjet’s credit rating to a “B” last year due to a huge drop in revenue.
Sarah Rhoads, head of Amazon’s air division, said: “Our goal is to continue delivering for customers across the US in the way that they expect from Amazon, and purchasing our own aircraft is a natural next step toward that goal.
“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.”
The company added that air freight plays a “crucial role” in keeping up its promises of rapid delivery, saying that the Westjet planes will begin flying with Amazon in 2021 and Delta’s some time in 2022. It currently has 66 planes in operation, according to the flight data site Planespotters.
Enders analyst Sanchit Jain said the deal was primarily about meeting soaring delivery demand in the US, as well as weaning Amazon off other shipping services such as UPS and FedEx, which it has begun to describe as competitors.
Mr Jain said: “Amazon had a falling out with FedEx last year, preventing sellers from using FedEx fulfilment entirely, citing poor delivery performance.
“Although on the whole the relationship with external suppliers has been relatively harmonious, Amazon’s all about vertically integrating its end to end process in order to focus on quality and upsell high margin services to its sellers.
“At a time when Delta and other carriers are offloading planes quickly, it’s a great opportunity to expand their fleet on the cheap.”
In future, the move could also assist Amazon’s own third-party shipping service. The company has massively expanded its logistics network during the pandemic, and its former logistics executive David Glick has described it as “building the world’s biggest package delivery company” in a direct assault on incumbent shipping firms.
Meanwhile, passenger airlines have been fighting to survive since the start of the pandemic: 23 of them had already folded by May, and the number of direct flight routes has dropped by 33pc worldwide and by two thirds in the UK.
Their situation improved with the promise of vaccines and digital “Covid passports” had offered some hope, with US airlines reclaiming their milestone of 1m passengers per day last October. Yet the runaway spread of the new coronavirus variant may dash those hopes.
Amazon declined to say how much it paid for the planes. Similar models have dropped in value by about 15pc from the start of 2020 and would now likely cost around $13-14m, according to the aviation consultancy Ascend by Cirium.
Recent Comments