Amazon buys 11 Boeing 767-300 jets to expand air transportation network

Shawn Knight

Posts: 13,425   +132
Staff member
What just happened? Amazon on Tuesday said it has purchased nearly a dozen used Boeing 767-300 aircraft to expand its air transportation network. Four of the aircraft are from WestJet and are currently being converted from passenger plans to cargo jets. Amazon expects these to enter its fleet later this year. The remaining seven jets, from Delta, should be ready to fly the friendly skies by 2022.

A spokesperson told Bloomberg that Amazon expects to have more than 85 planes in service by the end of next year. The purchase marks the first time Amazon has ever bought an aircraft. All of the jets it has used up to this point have been leased.

“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,” said Sarah Rhoads, vice president of Amazon Global Air and former Navy pilot.

Financial details of the purchase weren't shared although according to Rob Morris, a consultant at Ascend by Cirium, the Delta jets could be worth $13 million to $14 million each.

Indeed, being able to eliminate the middleman – in this case, traditional delivery specialists like UPS, FedEx and the USPS – allows Amazon to maximize profits and better control how goods are shuffled from warehouses around the globe. It also enables Amazon to create more jobs.

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brucek

Posts: 854   +1,220
I wonder how long until I can lease commercial air cargo space from my command line using Amazon Air Services.
 

Uncle Al

Posts: 8,158   +6,907
Considering all the aircraft related recertifications, maintenance, housing, staffing not only flight crew but all the maintenance staff and their overhead costs; replacement costs, insurance, etc, etc, etc .... I would challenge the sensibility of this move. There are also a bunch of soft costs that will come into play not to mention this also puts one more nail in the coffin of being classified as a monopoly as well. And if one of those jets crashes in a metropolitan area and kills a bunch of people all the civil suits will quickly evaporate any "savings" that might have been realized. Hate to sound all gloom and doom but Amazon continues to move away from their "core competence" which brought many companies to their knee's back in the 90's ....
 

brucek

Posts: 854   +1,220
Amazon's yearly shipping expense in 2019 was nearly $40 billion. It probably grew strongly in 2020. They can more than afford 11 planes dedicated to their use, including all related costs, which they would doubtless have been billed for anyway by the leasing company (which is not a charity).

As to the specifics of why the change now, I do wonder if there is a strategic element beyond just a hoped for cost savings. Were they maybe worried they couldn't otherwise guarantee they would have access to the planes they wanted? Or maybe there was an issue over lease terms that were preventing them from implementing the logistics strategy they wanted.

Also, I think Amazon's core competence has always been logistics.
 

Mister_K

Posts: 2,080   +779
Considering all the aircraft related recertifications, maintenance, housing, staffing not only flight crew but all the maintenance staff and their overhead costs; replacement costs, insurance, etc, etc, etc .... And if one of those jets crashes in a metropolitan area and kills a bunch of people all the civil suits will quickly evaporate any "savings" that might have been realized.

How is it any different than other private cargo planes that do more/less the same?
 

Irata

Posts: 1,657   +2,775
They did pick the right time to buy planes. Now is probably better than it's been in a very long time.
 

Uncle Al

Posts: 8,158   +6,907
How is it any different than other private cargo planes that do more/less the same?

If they have scheduled the contract correctly, ALL of the aforementioned costs are covered under the contract, relieving Amazon of anything INCLUDING all liability for operations, damages, etc. Of course it is all negotiable but if you consider even one major loss every 5 years, Amazon comes out ahead.
 

mctommy

Posts: 401   +135
Considering all the aircraft related recertifications, maintenance, housing, staffing not only flight crew but all the maintenance staff and their overhead costs; replacement costs, insurance, etc, etc, etc .... I would challenge the sensibility of this move. There are also a bunch of soft costs that will come into play not to mention this also puts one more nail in the coffin of being classified as a monopoly as well. And if one of those jets crashes in a metropolitan area and kills a bunch of people all the civil suits will quickly evaporate any "savings" that might have been realized. Hate to sound all gloom and doom but Amazon continues to move away from their "core competence" which brought many companies to their knee's back in the 90's ....
As Brucek mentioned above and to which I agree, amazon's core started and remained logistics. Along the way came highly profitable business such as AWS but they started with logistics selling books, now they are a logistics company getting you almost everything and shipping it to you. Even their purchase of pillpack was driven by the fact that they can flex their logistics expertise and scale that business up by spinning up new depos around the US.

By adding to their Amazon air fleet, they are adding flexibility and taking away further reliance on their transportation providers.