Amazon Plans to Start Its Own Airline

I remember when you used to go to to buy books.

They built their e-commerce model and expanded to where you can buy almost anything. They’re not a book seller, they’re a seller, and their advantages are ease, reliability, and comprehensiveness.

    My first orders. It was March 2001 before I bought anything other than books or music from Amazon.

Of course in building that model there are other businesses they’ve built along the way. They needed huge server capacity to handle the volume of transactions they process, so they built a real capability in managing servers. So they went into the hosting business.

They’re not afraid to try things, and they don’t all work out. Amazon tried selling travel. They’re testing food delivery.

Now it looks like they’re going to become an airline. Amazon is in talks to lease 20 Boeing 767s to start a cargo operation.

    Not Amazon’s New Livery

Apparently they’re frustrated by delays at third party delivery companies like UPS, so they figure they can do it better themselves.

Leasing 20 jets would be a significant expansion of an Amazon trial operation out of Wilmington, Ohio, operated by ATSG on Amazon’s behalf, sources said. A cargo-industry source said Amazon expects to make a decision to go beyond the trial run and pull the trigger on a larger air-cargo operation by the end of January.

If it works, they “could deliver for other companies, putting it in direct competition with UPS and FedEx” — a move I suppose depends on the tests, to see whether building out their capabilities here is like servers or like selling travel. Like servers this is flex capacity that they may need at peak holiday shipping time, but once acquired will be underutilized the rest of the year. That gives them the opportunity to build out the business at very low marginal cost.

The current iteration of the Wilmington-based trial features five 767s operated by Air Transport Services Group and planes operated by ABX Air.

Airplane-tracker Flight­ shows the two carriers are flying about five times a day from Wilmington to Dallas; Tampa, Fla., Ontario, Calif.; and Allentown, Pa. Amazon has warehouses near each of those airports.

From Nov. 1 through Dec. 17, the two ATSG carriers flew a total 219 flights with 767s from Wilmington. In the same period in 2014, the carriers flew just seven 767 flights from Wilmington.

It’s actually new to me that Wilmington, Ohio is a former cargo hub for Airborne Express and later DHL, which was shuttered in 2008.

If they’re open to something other than 767s I know where they can buy 2 Boeing 747s cheap. They just need to be careful not to do any Prime Shipping of sheep and goats.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Knowing almost nothing about cargo, I don’t really know if this is a good move on the part of Amazon. That said, logic suggests that there are tremendous advantageous of scale by pooling shipments from tens of thousands of shippers when moving those goods around the country. And, obviously, Amazon is in a great position to negotiate fantastic shipping discounts. Unless Amazon wants to get into the package delivery business and handle the shipping needs of other shippers, logic would suggest that this isn’t a terrific idea.

    Of course, Amazon does lots of things that don’t make any money, so what the heck!

  2. Ah the advantages of being a “tech company.” Start up airline loses money on flying = can’t make money in the airline business. Amazon loses money on flying = well they’re a tech company, they don’t need to turn a profit.

  3. Wilmington used to be an Air Force base through the early 70s and then got its second life with Airborne, etc.

  4. Amazon does an abysmal job of handling and tracking the packages we send to them for FBA, especially when they shuffle our inventory between their warehouses. If this gets off the ground, I expect major growing pains.

  5. Force Amazon to compete fairly by collecting sales tax in all 50 states.

    Subject them to the same criteria in the market that competitors must adhere to; ie, make a profit on core operations.

    Otherwise I dont shop them unless there are things I literally cant find locally – bit and pieces, repair parts to appliances, etc. Essentially they are a termite eroding the tax base and foundation of American retial.

  6. I worked for Airborne/ ABX for 24 years till they went out in 08, great co. To work for, but they are not cheap when it comes to ‘renting’ airplanes.It would behoove a co. The size of Amazon to start there ‘own airline’ and run the ‘brown bear and purple people eater’ out of business!!

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