Amazon announced Wednesday that it is set to lease 20 Boeing 767 widebody freighters from the Air Transport Services Group (ATSG) in the e-commerce giant's latest push towards developing its own delivery network.
Confirming the deal, the ATSG has also stated that Amazon leased the massive air freighters for a period of five to seven years. Leasing Boeing 767s that are specifically designed for cargo transport typically cost about $600,000 to $700,000 a month, while 767s, which used to be passenger planes, are cheaper, costing about $300,000 to $325,000 a month.
While the ATSG has not confirmed if the airplanes being leased by Amazons are freighters or converted passenger planes, it is expected that Amazon would be spending millions of dollars for the lease of the airplanes every year.
Despite the rather large amount, Amazon still expects to save a lot of funds by leasing the Boeing 767s from the ATSG. After all, the company has announced that it spends a significant portion of its funds on third-party delivery partners like United Parcel Service (UPS) and FedEx. Last year alone, Amazon spent a massive $11.5 billion on shipping.
Though the lease of the Boeing 767s is a notable step for Amazon towards self-reliance, analysts nonetheless believe that the company's plan to seemingly build a dedicated air fleet of its own poses no threat to the e-commerce giant's delivery partners.
RBC Capital Markets analyst John Barnes believes in this assumption.
"This is an incremental negative for FedX and UPS as it will likely remove some higher yielding express freight and parcel volume from each of the respective networks," he said.
Patrick Fitzgerald, FedEx's senior vice president of integrated marketing and communications, also welcomed Amazon's lease of the Boeing 767s.
"We work closely with Amazon and have been aware for some time of their need for supplemental air capacity related to inventory management," he said.
Even prior to the lease of the airplanes, Amazon has been taking significant steps towards creating its own self-reliant delivery system. The company has previously purchased thousands of trailers and hired contract drivers to expedite the delivery of its orders. Apart from this, the company has also started exploring the idea of using drones to deliver small packages to customers.
Amazon's leased Boeing 767s are set to start their operation on April 1.
