Dive Brief:
- Amazon will lease 15 Boeing 737-800 aircraft in a partnership with GE Capital Aviation Services (GECAS), Amazon announced at the International Paris Air Show. The 15 aircraft are in addition to five jets Amazon leased from GECAS earlier this year.
- "By 2021, Amazon Air will have a portfolio of 70 aircraft flying in our dedicated air network," Dave Clark, senior vice president of worldwide operations at Amazon, said in a press release.
- The aircraft will transport cargo in the U.S. through Amazon Air's network. The e-commerce giant plans to open new air facilities this year at Chicago Rockford International Airport, Forth Worth Alliance Airport in Texas and Wilmington Air Park in Ohio. Amazon's main air hub at the Cincinnati/Northern Kentucky International Airport will open in 2021.
Great work from the teams adding to our Air Cargo capacity! 15 more 737-800’s on the way...???????????????????????? https://t.co/1TkLwco5Jz
— Dave Clark (@davehclark) June 18, 2019
Dive Insight:
Amazon has moved aggressively to build out its own logistics network through initiatives such as its Delivery Service Partners program (which provides financial incentives for entrepreneurs to start a delivery business) and the expansion of its air cargo fleet and network.
Amazon entered the air space in 2016, leasing 40 cargo jets.
| Month | Aircraft leased |
|---|---|
| August 2016 | 40 |
| December 2018 | 10 |
| March 2019 | 15 |
| June 2019 | 5 |
Amazon press releases
The additional capacity allows Amazon to leverage its own delivery network and decrease its reliance on third-party carriers, an essential move as FedEx Express decided not to renew its contract with Amazon for domestic air shipments.
"We believe AMZN has enough linehaul capacity to insource all of its own Prime needs," Morgan Stanley analysts wrote after news of the FedEx-Amazon break-up. "In a sense, the trainer wheels are off the AMZN Logistics operation."
Amazon will likely continue building its air capacity to help execute one-day shipping for Prime members. In two years, Amazon expects it will have a network of 70 jets in its fleet, a small figure compared to established 3PLs. UPS owns 249 aircraft in its fleet, and FedEx Express uses 679 aircraft for shipments worldwide.
