Amazon buys Delta, WestJet Boeing jets as airplane costs fall

A wide-body aircraft with the Amazon Prime logo lands at Lehigh Valley International Airport in Allentown, Pennsylvania, USA on December 20, 2016. The photo was taken on December 20, 2016. Suitable for Insight AMAZON.COM-SHIPPING / REUTERS / Mark Makela

REUTERS / Mark Makela

Amazon announced Tuesday that it is purchasing 11 used Boeing 767-300 jets from Delta and WestJet. This is the latest sign of how cargo companies are growing as passenger airlines shrink their fleets as Covid-19 hurts demand for travel.

The expansion is coming as Amazon continues to push for faster delivery as the number of online orders increases due to a pandemic. Staying home customers have turned to service for both essential and non-essential goods as the holiday shopping season created further demand for quick delivery.

The four WestJet aircraft will be converted into cargo jets and will join the Amazon Air fleet this year, while the seven Delta aircraft will be added after their conversion in 2022, Amazon said.

The company has steadily expanded the fleet of aircraft intended for its Amazon Air cargo operation through leasing contracts. However, Tuesday’s announcement marks the first direct plane purchase, Amazon said.

“With a mix of leased and owned aircraft in our growing fleet, we can better manage our operations, which in turn helps us keep up with our customers’ promises,” said Sarah Rhoads, vice president of Amazon Global Air in a statement.

Amazon said the Amazon Air fleet will have more than 85 leased and owned aircraft by the end of 2022. Amazon launched its air fleet in 2016, leading to speculation that it would reduce its reliance on UPS and FedEx. The company still relies on external carriers for some of its deliveries, but has rapidly accelerated its internal logistics activities, especially during the pandemic. The Amazon Air fleet is operated by Atlas Air Worldwide Holdings and the Air Transport Services Group.

The expansion builds on the ramp-up of Amazon’s air freight fleet last year. The company’s $ 1.5 billion air hub in Kentucky is scheduled to open this year. It has capacity for 100 Amazon-branded aircraft and is expected to handle 200 daily flights.

Amazon and Delta declined to disclose the price of the planes, but the value of many planes has plummeted this year as the coronavirus decimated demand for travel. According to Ascend by Cirium, an aviation consultancy, the Boeing 767-300ER readings were around 15% lower in mid-December compared to early 2020. Rob Morris, a consultant at Ascend, said the Delta aircraft are roughly 20 years old and valued at nearly $ 13 million to nearly $ 14 million between major maintenance cycles.

Delta and other airlines have hastened aircraft shutdowns to cut costs as the virus and a web of travel restrictions and quarantine requirements designed to help slow the spread of the disease have kept many potential customers at home.

Delta announced in June that it would retire seven of its Boeing 767-300ER jets by the end of 2020 and announced in October that it would retire the remaining 49 of its 767-300ER aircraft by the end of 2025.