The airline industry’s loss is Amazon’s gain as the e-commerce giant purchases 11 Boeing 767 airliners to use as cargo planes

Prime Air plane

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Amazon on Tuesday announced the purchase of 11 cargo aircraft for its Prime Air fleet as cargo demand surges and airliners are being forced to ditch their older aircraft in the wake of the pandemic.

The Boeing 767-300ER passenger aircraft were purchased from Delta Air Lines and Canada’s WestJet, both of which used the aircraft for long-haul international flights. Carriers have been turning to the ever-growing supply of former passenger jets to increase capacity as the existing number of cargo aircraft hasn’t been able to keep up with growing demand in the industry.

The deal is notable as it’s the first aircraft purchased by Amazon instead of leased. Amazon has traditionally leased aircraft from freight giants like Atlas Air and ATSG, who operated the aircraft and provided the crew, maintenance, and insurance. 

 “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,” Sarah Rhoads, Amazon Global Air’s vice president, said in a statement. 

Full ownership gives the e-retailer more flexibility to do what it wants to the aircraft, Chris Seymour, head of market analysis for Cirium, told Business Insider, and is likely more cost-effective than a lease in the long-run. It’s a buyer’s market for the 767 right now as passenger airlines are retiring them. 

“They can decide where they place it with,” Seymour said. “They can decide when they want to replace it or they want to retire it. They’re not beholden to another carrier.”

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Amazon’s purchase also furthers its goal of bringing more of its delivery services in house. Prime Air launched in 2016 and the fleet has since grown to over 70 aircraft, with this latest acquisition likely just the beginning for Amazon as more passenger aircraft are retired and sold for cheap. 

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The Boeing 767-300ER has been given a second life in cargo while most US airlines including American Airlines and Delta have opted to give the plane an early retirement. It’s a favorite among carriers like UPS Airlines, FedEx Express, Atlas Air, and ATSG, among others, and still sees passenger service with United Airlines. 

Four aircraft have already arrived in Israel where they’ll be converted to freighters, a process that’s grown in popularity as cargo carriers scoop up retired airliners. This year is slated to see an increase in conversions from 68 aircraft in 2020 to 90, Seymour estimates, as the demand for freighters increases.

“The conversion market is increasing again, part of that is due to the need for more cargo aircraft,” Seymour said. “The integrators, particularly in e-commerce like Amazon, are the ones driving the growth in conversions.”

Only a handful of firms have the capability to convert aircraft including Boeing and Israel Aircraft Industries. The latter is Amazon’s converter of choice, as Reuters reported, with the firm handling 80% of aircraft conversions …read more

Source:: Businessinsider – Tech


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