Amazon Buys 767-300's. Who will fly them?
#1
Amazon Buys 767-300's. Who will fly them?
Who will fly these jets?
Amazon Air buys ex-Delta Boeing 767s - The Points Guy
Amazon Air buys ex-Delta Boeing 767s - The Points Guy
#2
#3
Gets Weekends Off
Joined APC: Aug 2016
Posts: 492
No. That's DHL.
The linked article to the Points Guy, and the "study" mentioned therein, are both completely-clueless, replete with errors.
Example: Amazon is "dry-leasing from carriers Atlas and Southern". Really? Amazon is dry-leasing 19 767-300s not from Atlas, but rather from AAWW subsidiary Titan/Andromeda. They're not dry-leasing from the carrier. Moreover, the 737s are dry-leased from GECAS, not Southern, but a few of them are operated by Southern under a CMI agreement, with the rest operated by Sun Country as a result of Southern not performing to expectation. These distinctions are actually important in understanding the business model. And the reality is that at Amazon's miniscule cost-of-capital, it makes no sense to lease unless you don't have the expertise to do aircraft selection, price-negotiation, and conversion-monitoring yourself. At this point, it's a fair bet that Amazon does. Since the dry-leases don't tie Amazon to any one carrier to operate them (as the movement of 2 aircraft from Atlas when it wasn't performing proves), the Points Guy's lack of understanding of the actual business model makes it seem to him/her that Amazon buying its own aircraft is some kind of big deal when it really isn't. Locking yourself into a ten-year unbreakable lease for an asset is the same kind of financial commitment that buying it is, with only a little-more flexibility. And it ain't worth the more-than-1-percent difference in what Amazon pays as an interest rate to borrow money, compared what AAWW and ATSG pay, to have that flexibility.
Example: The "study" points out that Amazon runs more point-to-point flights than FedEx and UPS. Duh. The "study" authors just figured this out? Hello: Amazon HAS TO run mostly point-to-point. Until the CVG hub opens, they have no sorting ability besides the long-maxed-out DHL sort and their ILN mini-sort, which is plainly an experience-builder for when they open CVG. Once CVG opens, I expect that we will see significant changes in the operation of the fleet.
And who says that all the planes that Amazon is buying are for operation within the US?
It's certainly significant that Amazon's fleet will likely grow by at least 22 aircraft in 2021 (11 dry-leases from ATSG and the 11 that Amazon has now purchased from Westjet and DL), assuming that the purchased aircraft will all be converted in 2021. (But at least most of them can be, so they will be. In fact, Amazon is pushing to accelerate the onboarding of at least some of the 5 ATSG/CAM aircraft now scheduled for delivery in 1Q 2021, and likely the 6 that were to come from CAM in the balance of 2021.)
The linked article to the Points Guy, and the "study" mentioned therein, are both completely-clueless, replete with errors.
Example: Amazon is "dry-leasing from carriers Atlas and Southern". Really? Amazon is dry-leasing 19 767-300s not from Atlas, but rather from AAWW subsidiary Titan/Andromeda. They're not dry-leasing from the carrier. Moreover, the 737s are dry-leased from GECAS, not Southern, but a few of them are operated by Southern under a CMI agreement, with the rest operated by Sun Country as a result of Southern not performing to expectation. These distinctions are actually important in understanding the business model. And the reality is that at Amazon's miniscule cost-of-capital, it makes no sense to lease unless you don't have the expertise to do aircraft selection, price-negotiation, and conversion-monitoring yourself. At this point, it's a fair bet that Amazon does. Since the dry-leases don't tie Amazon to any one carrier to operate them (as the movement of 2 aircraft from Atlas when it wasn't performing proves), the Points Guy's lack of understanding of the actual business model makes it seem to him/her that Amazon buying its own aircraft is some kind of big deal when it really isn't. Locking yourself into a ten-year unbreakable lease for an asset is the same kind of financial commitment that buying it is, with only a little-more flexibility. And it ain't worth the more-than-1-percent difference in what Amazon pays as an interest rate to borrow money, compared what AAWW and ATSG pay, to have that flexibility.
Example: The "study" points out that Amazon runs more point-to-point flights than FedEx and UPS. Duh. The "study" authors just figured this out? Hello: Amazon HAS TO run mostly point-to-point. Until the CVG hub opens, they have no sorting ability besides the long-maxed-out DHL sort and their ILN mini-sort, which is plainly an experience-builder for when they open CVG. Once CVG opens, I expect that we will see significant changes in the operation of the fleet.
And who says that all the planes that Amazon is buying are for operation within the US?
It's certainly significant that Amazon's fleet will likely grow by at least 22 aircraft in 2021 (11 dry-leases from ATSG and the 11 that Amazon has now purchased from Westjet and DL), assuming that the purchased aircraft will all be converted in 2021. (But at least most of them can be, so they will be. In fact, Amazon is pushing to accelerate the onboarding of at least some of the 5 ATSG/CAM aircraft now scheduled for delivery in 1Q 2021, and likely the 6 that were to come from CAM in the balance of 2021.)
Last edited by wjcandee; 12-31-2020 at 03:10 PM.
#4
Line Holder
Joined APC: Feb 2011
Posts: 37
No. That's DHL.
The linked article to the Points Guy, and the "study" mentioned therein, are both completely-clueless, replete with errors.
Example: Amazon is "dry-leasing from carriers Atlas and Southern". Really? Amazon is dry-leasing 19 767-300s not from Atlas, but rather from AAWW subsidiary Titan/Andromeda. They're not dry-leasing from the carrier. Moreover, the 737s are dry-leased from GECAS, not Southern, but a few of them are operated by Southern under a CMI agreement, with the rest operated by Sun Country as a result of Southern not performing to expectation. These distinctions are actually important in understanding the business model. And the reality is that at Amazon's miniscule cost-of-capital, it makes no sense to lease unless you don't have the expertise to do aircraft selection, price-negotiation, and conversion-monitoring yourself. At this point, it's a fair bet that Amazon does. Since the dry-leases don't tie Amazon to any one carrier to operate them (as the movement of 2 aircraft from Atlas when it wasn't performing proves), the Points Guy's lack of understanding of the actual business model makes it seem to him/her that Amazon buying its own aircraft is some kind of big deal when it really isn't. Locking yourself into a ten-year unbreakable lease for an asset is the same kind of financial commitment that buying it is, with only a little-more flexibility. And it ain't worth the more-than-1-percent difference in what Amazon pays as an interest rate to borrow money, compared what AAWW and ATSG pay, to have that flexibility.
Example: The "study" points out that Amazon runs more point-to-point flights than FedEx and UPS. Duh. The "study" authors just figured this out? Hello: Amazon HAS TO run mostly point-to-point. Until the CVG hub opens, they have no sorting ability besides the long-maxed-out DHL sort and their ILN mini-sort, which is plainly an experience-builder for when they open CVG. Once CVG opens, I expect that we will see significant changes in the operation of the fleet.
And who says that all the planes that Amazon is buying are for operation within the US?
It's certainly significant that Amazon's fleet will likely grow by at least 22 aircraft in 2021 (11 dry-leases from ATSG and the 11 that Amazon has now purchased from Westjet and DL), assuming that the purchased aircraft will all be converted in 2021. (But at least most of them can be, so they will be. In fact, Amazon is pushing to accelerate the onboarding of at least some of the 5 ATSG/CAM aircraft now scheduled for delivery in 1Q 2021, and likely the 6 that were to come from CAM in the balance of 2021.)
The linked article to the Points Guy, and the "study" mentioned therein, are both completely-clueless, replete with errors.
Example: Amazon is "dry-leasing from carriers Atlas and Southern". Really? Amazon is dry-leasing 19 767-300s not from Atlas, but rather from AAWW subsidiary Titan/Andromeda. They're not dry-leasing from the carrier. Moreover, the 737s are dry-leased from GECAS, not Southern, but a few of them are operated by Southern under a CMI agreement, with the rest operated by Sun Country as a result of Southern not performing to expectation. These distinctions are actually important in understanding the business model. And the reality is that at Amazon's miniscule cost-of-capital, it makes no sense to lease unless you don't have the expertise to do aircraft selection, price-negotiation, and conversion-monitoring yourself. At this point, it's a fair bet that Amazon does. Since the dry-leases don't tie Amazon to any one carrier to operate them (as the movement of 2 aircraft from Atlas when it wasn't performing proves), the Points Guy's lack of understanding of the actual business model makes it seem to him/her that Amazon buying its own aircraft is some kind of big deal when it really isn't. Locking yourself into a ten-year unbreakable lease for an asset is the same kind of financial commitment that buying it is, with only a little-more flexibility. And it ain't worth the more-than-1-percent difference in what Amazon pays as an interest rate to borrow money, compared what AAWW and ATSG pay, to have that flexibility.
Example: The "study" points out that Amazon runs more point-to-point flights than FedEx and UPS. Duh. The "study" authors just figured this out? Hello: Amazon HAS TO run mostly point-to-point. Until the CVG hub opens, they have no sorting ability besides the long-maxed-out DHL sort and their ILN mini-sort, which is plainly an experience-builder for when they open CVG. Once CVG opens, I expect that we will see significant changes in the operation of the fleet.
And who says that all the planes that Amazon is buying are for operation within the US?
It's certainly significant that Amazon's fleet will likely grow by at least 22 aircraft in 2021 (11 dry-leases from ATSG and the 11 that Amazon has now purchased from Westjet and DL), assuming that the purchased aircraft will all be converted in 2021. (But at least most of them can be, so they will be. In fact, Amazon is pushing to accelerate the onboarding of at least some of the 5 ATSG/CAM aircraft now scheduled for delivery in 1Q 2021, and likely the 6 that were to come from CAM in the balance of 2021.)
And you disagreed with your own point. Sim country is more expensive that southern is. So DHL is looking at performance. Amazon will do the same. That’s why they keep asking K4 to fly 76s for them.
#8
Gets Weekends Off
Joined APC: Jun 2006
Position: Left, right & center
Posts: 764
Or waiting for freight and not worrying about being “on time” because the freight is late. I’ve heard a rumor that aerologic might lose some planes because they leave freight behind.
#9
Gets Weekends Off
Joined APC: Aug 2016
Posts: 492
I don't want my snarky comment about DHL going for the lowest bidder to hijack the thread. I concede that they keep giving aircraft to Kalitta, which is a fine carrier.
But I have no idea what Southern charges DHL for an equivalent 777 trip compared to Connie. It's probably not published anywhere, so how do we know? Moreover, there's a difference between giving the business to the better carrier because he's better and giving the business to him because the cheaper carrier couldn't handle any more, which was arguably the situation at Southern for a while.
Regardless, DHL also got under the covers with 21Air, MASAir, Amerijet and now Mesa. And they have pulled a lot of planes from ABX, which is an excellent, experienced express carrier that puts up solid stats. Yet some are suggesting that performance trumps price in DHL's decision-making -- or at least that they will pay more for superior performance -- which I don't think is borne out by the data. I think Reactivity is closer to the mark.
Me, personally, for what my opinion is worth, I think DHL considers air transportation to be a commodity to be purchased like all other commodities, like, say, fuel. As long as the product meets their minimum standards, which they apparently find that 21Air and Mesa are doing, if the price is right, Welcome Aboard!
But I have no idea what Southern charges DHL for an equivalent 777 trip compared to Connie. It's probably not published anywhere, so how do we know? Moreover, there's a difference between giving the business to the better carrier because he's better and giving the business to him because the cheaper carrier couldn't handle any more, which was arguably the situation at Southern for a while.
Regardless, DHL also got under the covers with 21Air, MASAir, Amerijet and now Mesa. And they have pulled a lot of planes from ABX, which is an excellent, experienced express carrier that puts up solid stats. Yet some are suggesting that performance trumps price in DHL's decision-making -- or at least that they will pay more for superior performance -- which I don't think is borne out by the data. I think Reactivity is closer to the mark.
Me, personally, for what my opinion is worth, I think DHL considers air transportation to be a commodity to be purchased like all other commodities, like, say, fuel. As long as the product meets their minimum standards, which they apparently find that 21Air and Mesa are doing, if the price is right, Welcome Aboard!
Last edited by wjcandee; 01-03-2021 at 10:16 PM.
#10
Gets Weekends Off
Joined APC: Jun 2017
Position: 777 Left window seat
Posts: 632
K4 has the highest rates of the CMI carries, yet they keep getting new 777s. Maybe performance has something to do with it. Or waiting for freight and not worrying about being “on time” because the freight is late. I’ve heard a rumor that aerologic might lose some planes because they leave freight behind.
And you disagreed with your own point. Sim country is more expensive that southern is. So DHL is looking at performance. Amazon will do the same. That’s why they keep asking K4 to fly 76s for them.
And you disagreed with your own point. Sim country is more expensive that southern is. So DHL is looking at performance. Amazon will do the same. That’s why they keep asking K4 to fly 76s for them.
DHL is in the process of replacing 744s (especially converted 744s) on many of their routes due to fuel inefficiencies compared to the 777Fs. European carbon footprint rules are a big factor and DHL is under those rules. That is the biggest reason behind K4 receiving the CMI operated DHL 777s they have so far. If Connie wanted to continue business with DHL (which I’m sure both Connie and DHL desired) he had to make the transition. Covid has delayed the demise of the 744s on the DHL ramp. The Polar certificate is also under pressure to replace the 744s with 777Fs. However, until both Atlas/Southern are combined under a SOC it’s impossible unless AAWW wants to add 777Fs to the Atlas/Polar certificate(s). That’s not going to happen due to the huge cost of starting up the program when they already own an airline that operates 777Fs (Southern). Also, there are 5 additional 777Fs owned by AAWW/Titan that are currently leased to other operators (3 at TNT and 2 at AeroLogic). I don’t know when those leases expire or if the customers/Titan will renew or if those airframes will go to another operator like Southern/Atlas. Eventually you will only see 748s, 777s, and A330s in DHL’s big airplane parking spots.
DHL is a fickle mistress. Just because you have the current dance doesn’t mean she won’t go home with someone else.....and AMZN has definitely learned from watching DHL.
Last edited by Birdsmash; 01-04-2021 at 01:39 AM.
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