Amazon said Tuesday it's buying 11 used Boeing 767-300 jets from Delta and WestJet, the latest sign of how cargo carriers are growing while passenger airlines rush to shrink their fleets as Covid-19 hurts travel demand.
The expansion comes as Amazon continues to push for faster delivery amid a pandemic-fueled surge in online orders. Stuck-at-home shoppers have turned to the service for both essential and nonessential goods, while the holiday shopping season generated further demand for speedy delivery.
The four WestJet planes are being converted to cargo jets and will join the Amazon Air fleet this year, while the seven Delta planes will be added in 2022 after their conversion, Amazon said.
The company has been steadily building up the fleet of planes dedicated to its Amazon Air cargo operations through leasing agreements but Tuesday's announcement marks its first-ever outright aircraft purchase, Amazon said.
"Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which, in turn, helps us to keep pace with meeting our customer promises," Sarah Rhoads, vice president of Amazon Global Air, said in a statement.
Amazon said the Amazon Air fleet will have more than 85 planes, both leased and owned, by the end of 2022. Amazon launched its air fleet in 2016, prompting speculation that it would reduce its reliance on UPS and FedEx. The company still relies on outside carriers for a portion of its deliveries, but it has rapidly accelerated its in-house logistics operations, particularly during the pandemic. Amazon Air's 767 fleet is operated by Atlas Air Worldwide Holdings and Air Transport Services Group, but an Amazon spokeswoman declined to comment on which airlines would operate the newly purchased planes.
The expansion builds on Amazon's ramp up of its air cargo fleet last year. The company's $1.5 billion air hub in Kentucky is slated to open this year,. It has capacity for 100 Amazon-branded planes and is expected to handle an estimated 200 flights per day.
Amazon, Delta and WestJet declined to disclose the planes' price but the value of many aircraft has plunged this year as the coronavirus decimated travel demand. Boeing 767-300ERs values in mid-December were about 15% lower compared with the start of 2020, according to Ascend by Cirium, an aviation consulting firm. Rob Morris, a consultant at Ascend, said the Delta aircraft are about 20 years old and, if between major maintenance cycles, would be valued at close to $13 million to nearly $14 million each.
Delta and other airlines have sped up retirements of aircraft to help cut costs as the virus and a web of travel restrictions and quarantine requirements aimed at slowing the disease's spread, kept many potential customers at home.
Delta in June said it planned to retire seven of its Boeing 767-300ER jets by the end of 2020 and in October it announced it plans to retire the remaining 49 of its 767-300ER aircraft by the end of 2025.
Clarification: This story has been updated to clarify that Amazon Air's 767 fleet is operated by Atlas Air Worldwide Holdings and Air Transport Services Group.