Amazon Air set to sell space on its aircraft to third parties
03 / 01 / 2023
Source: Amazon
Amazon Air is set to start selling spare capacity on its aircraft as it responds to a post-pandemic slowdown in e-commerce spending, according to Bloomberg.
The news agency quotes people familiar with the matter as saying that the e-commerce carrier will look to sell backhaul space on aircraft operating to Hawaii and Alaska.
The flights would carry perishable items such as pineapples and salmon, the report suggested.
Bloomberg pointed out that Amazon Air has also been busy hiring executives with experience in marketing cargo capacity.
The move doesn’t come as too much of a surprise. Market observers have been speculating for a while that the airline could sell some of its spare capacity to third parties and a market downturn is likely to have led to the spare space on aircraft and the need to find new revenue streams.
In early 2021, a Chaddick Institute for Metropolitan Development report suggested that Amazon would look to move into third-party selling in the next 18 months.
“Amazon would likely focus on retailer-to-consumer shipments — e.g., moving packages from retailer warehouses to consumers — without trying to replicate the comprehensive services offered by FedEx and UPS, which have vast door-to-door networks,” the report said.
At that stage it is not clear if the move is a long-term strategy to compete with the likes of FedEx and UPS or a measure to fill spare capacity that it cannot fill with its own cargo.
The slowdown in e-commerce growth following the Covid pandemic – where people turned to online shopping due to restrictions – has also led the e-commerce company to slow the expansion of its fleet.
Total Amazon Air flight activity grew by 3.8% between August 2021 and March 2022, compared to 14.3% during the previous six months.
Meanwhile, until the end of September, its fleet remained at around 88 aircraft following rapid growth in 2021.
Despite the slowdown, the company announced in the final quarter of last year the addition of 10 A330-300 converted freighters from lessor Altavair.
The aircraft will be operated for Amazon by Hawaiian Airlines and will be converted by Germany-headquartered Elbe Flugzeugwerke (EFW), a joint venture between Singapore-based ST Engineering and France-headquartered Airbus.
Amazon Air is not the only parcel carrier to be affected by a slowdown in e-commerce growth.
Last year, FedEx announced it would reduce flying and park aircraft after revenues missed expectations.
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