The airline industry's loss is Amazon's gain as the e-commerce giant purchases 11 Boeing 767 airliners to use as cargo planes
Amazonjust purchased 11 Boeing 767-300ER aircraft to be converted into cargo freighters for its Prime Air fleet.
- The former airliners most recently flew for Delta Air Lines and WestJet and became casualties of the pandemic once international borders closed.
- The first aircraft will fly this year with the rest taking to the skies by the end of 2022.
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.
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."
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.Read more: How Dave Clark, the mastermind behind Amazon's coronavirus response, became one of the most powerful executives in America 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 for Amazon as of July 2019.
The months-long conversion process sees the addition of a cargo door and reinforcement of the cabin floor to accommodate cargo pallets, among other updates. The cost to convert a Boeing 767-300ER is in the $13-$14 million area, Seymour said.
It can often cost just as much to buy the aircraft as it does to convert them to freighters. The actual purchase price that Amazon paid, however, is unknown and can be influenced by a variety of factors including the current demand for the aircraft, the remaining life of the engines, and maintenance conditions.The seven aircraft acquired from Delta were among the youngest in the airline's fleet, fleet data provided by Cirium shows, with five being built in 2000 and one in 2001. Delta is phasing out the 767-300ER over the next five years to be replaced with newer jets from Airbus including the A350-900 XWB and A330-900neo.
Amazon won't directly operate the aircraft as Prime Air still doesn't have an operating certificate to fly its own
"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," Rhoads said.Amazon said the converted WestJet aircraft will join the Prime Air fleet this year while the Delta planes are expected to fly in 2022.
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