Amazon not yet scaling back flights in face of economic challenges

Amazon Air’s flights have increased in the last six months despite economic challenges impacting e-commerce demand and announcements that it will scale back some third-party operations.

The carrier’s flight activity grew by 5.8% between August 2022 and March, found a new study by Chaddick Institute of Metropolitan Development at DePaul University in Chicago.

This is compared to a 3.8% increase in the previous six months but lags behind the 14% growth rate of 2021.

The statistics are in contrast to recent reports of Amazon’s moves to scale back US freighter operations with lessor Air Transport Services Group (ATSG) and start selling spare capacity on its aircraft due to global economic pressures and reduced e-commerce demand.

“An important conclusion for our analysis is that Amazon Air is not scaling back flights in response to the retail-sales growth slowdown, although its growth rate has clearly diminished and domestic growth is small, said the report’s authors.

They added: “Several prominent players in the air-cargo industry, including FedEx and ATSG Group (an Amazon Air contractor), have recently warned that their flying will likely diminish due to a recent sharp downturn in demand.

“Our analysis, however, suggests that Amazon Air’s growth is driven primarily by a desire to accelerate its delivery options and protect market share amid mounting competition from both other online platforms and brick-and-mortar stores rolling out new conveniences.

“Although a recession could result in strategic shifts and a markedly reduced growth rate, we believe Amazon continues to have compelling reasons to expand its airline.”

Amazon Air activity at its main Cincinnati-Northern Kentucky International Airport (CVG) hub is rapidly expanding, having grown from 44 to 58 daily flights since September, said the report.

The number of flights on Amazon Air-branded planes has increased by about a third (31.5%), from 43.9 to 57.7 daily, between September 2022 and February 2023, resulting in a roughly 125% increase over the past year.

The carrier’s fleet is also steady in size and activity, reported the study.

“Between September and February, the number of airplanes reported as part of its fleet remained steady, in the 89–92 range. We estimate, therefore, that Amazon Air makes 2–3% more flights per airplane than six months ago.”

Partner flights involving planes not branded as part of Amazon Air, have also grown, found the study.

“Partner flights across the system also grew, although modestly. These planes contribute perhaps 15–20% to Amazon’s overall air capacity, we estimate, although the uncertainty about the likely range must be acknowledged.”

Amazon’s expanded capacity at CVG makes the carrier more competitive as an express carrier in the US, noted the study.

However, domestic flying rose just 2.8%, while domestic activity not involving CVG dropped 1.5%.

In addition to CVG, Amazon is consolidating US activity at three other hubs: Fort Worth Alliance, Texas, San Bernardino International, California, and Lakeland, Florida.

The report said that by early 2024 expansion on the US mainland will remain relatively slow, but expansion at CVG will continue, it’s hub approach will support utilization of its fleet and the use of its available payload capacity while also facilitating third-party shipping, and efforts to expand flying within Europe and India.