Isn't Connie trying to get more DHL flying and break into the Amazon flying? Although I think K4 may have flown some Amazon trips already,possibly.

Doesn't Atlas fly many, many ad hoc charters? Arent the companies getting more and more alike as time passes?

It just seems that Atlas is more advanced and Connie is following down the same path.

Another question, we already know that Atlas Pilots showed up for the K4 events when you guys were negotiating, but have any K4 guys showed up at the last few Atlas events?

 

Kalitta guys won't be able to convince ALL of the Atlas guys to vote DW out, but that isn't necessary either. I'm at ABX, and I fully intend to vote to remove him. If you can convince some Atlas guys and most of the non-Atlas guys in 1224 voting him out seems very feasible. DW is a snake. He's not all that well-loved here.

As a side note, if you really think that you sound like a reasonable human being when you support someone preventing a separate pilot group from getting the contract that they want, you need to wake up. Tell your own management that you're not willing to accept the same thing, but get off the K4 guys' backs and act like an adult.

DW is currently failing at what I perceive to be his most important responsibility: keeping us unified in 1224. Losing K4 will be devastating to our collective efforts. If for no other reason than this, DW needs to go.

 

Atlas! Don't think it was not appreciated either. If you think ANYONE at K4 has any problems with any line pilot at Atlas you are sadly mistaken. That statement wasn't about individuals it was a statement about competing companies. There many former K4 pilots at Atlas.

OCSKYGUY pointed out a while ago, and then again and again, that this is not about duty days, insurance, trips, profitability. It is about giving one person the power to interfere with legitimate negotiations, while having a HUGE conflict of interest in the outcome.

Look back at my previous posts when our negotiations were on. I had the same concerns then. Fell of deaf ears. Now we look into leaving, and lots of discussion and opinions. Glad to have this board to do this on.

I want nothing but success in contract negotiations for all pilots. We have been waiting many years for the current environment. However as you will see if you are not Atlas, the deck is very much stacked against you. For what it is worth, Dan Well is doing a great job for Atlas pilots. It is just hurting the rest of us.

Please try to not focus on the butterflies so much when there is such a large elephant in the room.

 

Connie has not as of yet flown any Amazon. In order for Amazon to dry-lease aircraft but avoid having to acquire its own AOC, it has taken an ownership position in the operating carrier. I do not think that Amazon is going to get any more net 767s in any event in the near term (i.e. beyond the 40). Down the road, they may trade out some 767-200s for 767-300s, but probably not until the tail end of their existing 767-200 dry leases. That said, it has traditionally been hard to overestimate Amazon's volume growth, so their needs may be exponentially higher just a few years from now, and the playing field with regard to alternative full-service carriers like FedEx and UPS can also change. But sitting here today, I don't see it.

My own opinion is that Northern Aviation has a significant opportunity to be a meaningful player at Prime Air. It was part of the original Aerosmith experiment, where it handled 737 routes. Future expansion might find its way onto an aircraft of that size. Northern can fly 737s and 767s (and by extension 757s), and it doesn't hurt that Saltchuk's top guy is a friend of Bezos. While that would be a lot of expansion for a relatively small carrier, ATI has gone from 7 aircraft to 23+ in less than 2 years, albeit with a more-robust infrastructure.

So If Connie somehow manages to break into the Amazon flying, which I think is unlikely because of the above-mentioned AOC issues, it would be along the lines of what he and Atlas are doing for DHL, where he is slowly replacing ABX, and/or taking what otherwise would have been ABX expansion opportunities on the 767-300.

 

Amazon already asked us to fly for them in exchange for 20% of the company. Connie told them to pound sand.

We bought our own airplanes. And still looking for more.

 

Working for Amazon is like working at Walmart, with less emphasis of the employees. If you want to talk about the race to the bottom, start there!

 

So Amazon is spending $1.5 billion to build a global hub with more than 100 wide-body spots, but you don't see more tha 40 767's?

 

Not in the next 3-4 years, no I don't. I think you would see a good number of smaller a/c before you see more 767s. It just makes sense.

Those "100 spots" are exactly the kind of thing that a smart company plans for and gets permission for now while all the politicians are sucking up and throwing money at them to come to their airport, rather than 10 years down the road when they need to expand and the same politicians and NIMBYs hold them for ransom on the expansion, realizing that Amazon is stuck at CVG due to their significant existing capital investment. (Although their actual current capital investment at CVG is pretty small.) Smart businesses always plan for pie-in-the-sky and rarely achieve it. Every developer I have ever known looks at a plot of dirt, buys the whole thing, and plans -- and gets the permissions for -- a grand complex of buildings, in phases over time. Only the luckiest ones ever get past Phase I, and they sell off the excess when the ever-cyclical market declines and they need the moolah. But the ones that do get lucky don't have to go back for permission down the line when they are vulnerable and have no leverage.

(And, for what it's worth, the press releases actually said "100 aircraft parking spots"; it didn't expressly say widebodies. But making them widebody spots would make sense in any case: as long as you're building them from scratch, why not leave enough room to fit widebodies? If nothing else, it makes moving the pieces around the chess board much easier if every spot can take every airplane. It doesn't mean that only widebodies will be pulling into them.)

Like I said, it's the rare person that has overestimated the growth of the Amazon juggernaut. But it is going to slow eventually, as competitors finally figure stuff out. Walmart is one that's figuring it out and winning market share (although their online is about 1/9th the size of Amazon). And some other paradigm might become more popular over the next decade. Look at how things have changed in just the last one. Toss in all the knives that are being sharpened for Amazon, from European regulators to antitrust nabobs to you-guys-who-hate-them to activist investors who want them to divest the profitable computer-services businesses that fund the growth of the online sales platform to labor activists that want to raise the cost of their distribution center operations, and there's always a chance that the Lilliputions will tie enough rope around Amazon/Gulliver that its growth is halted.

So it makes total sense to me that they plan for 100 spots (in phases) and to sort a kabillion packages per minute. But that doesn't mean that anyone is ever going to see 100 Prime Air widebodies on the ground at CVG at the same time. I don't think that the share of total Amazon volume that is designated for Prime Air can sustain more widebodies as it expands into smaller markets and runs smaller-volume point-to-point routes, which continue to be a significant part of their network. And I don't think that the actual experience of the Prime Air network to date is making anybody think that it should get a bigger share of the air line-haul component than originally-planned.

I also don't see Amazon doing a wholesale pullaway from UPS and FedEx on parcels that need to get on a plane, because one point of Prime Air was to mitigate risk by increasing the number of delivery channels available in case one goes down. And given the constant sabre-rattling and anti-Amazon vitriol from some of the members here about how they're going to intentionally screw up Cyber Monday blah-blah, and the the strike last year, nobody at Amazon should be under the illusion that bringing the air line-haul in-house is going to magically give them control over their own destiny come Peak. More-reliable network = more traffic over that network; less-reliable network = less traffic over that network. So Prime Air just becomes one more potential point of catastrophic failure in air line-haul, and it's better to have three of those rather than just two. But it ain't what I'm sure some hoped and envisioned it to be.

Right now, they are serving 20-ish aircraft with a day sort contracted to DHL, and it is going much better than I expected the Deutche Dumkoffs to manage. Amazon has a lot of options in terms of how fast they build their own facility and how many phases the development takes. They could go balls-to-the-wall on it, or they could continue longer than anticipated using DHL as a ground-services/sort contractor. I think they're gonna need their own facility if they ever decide to try to do regular overnight delivery with Prime Air, because they will need a robust night-sort. There's no current indication that they would do that anytime soon if ever, and until then, there's a good bit of room to expand the day sort and point-to-point flying of 2-day volume, including into markets that don't need a widebody. And, of course, enormous Amazon resources continue to be poured into their predictive modelling in order to increase the likelihood that the widget you want has been ground-hauled into a DC near you in anticipation of your order, so it can just get on a truck to you rather than having to get on a plane. As the speed, breadth and efficiency of their in-house ground network from DC to PSC to USPS/Lasership-OnTrack/AMZL final-mile continues to increase, this also widens the geographic area in which your widget order can get on a truck rather than a plane.

That's just my analysis of it. And we all know what opinions are like. And I'm just one more outsider looking in.

But if they do go a smaller-plane route, that does open up opportunities for folks like Doug and Northern, depending I suppose upon what the optimal smaller aircraft turns out to be and how the incumbent carriers perform. Obviously, ATSG is very interested in having CAM buy and dry-lease-out 737s, and having PEMCO convert them. Are they interested in having one of their carriers fly them? I dunno. Is Billy Flynn interested in operating aircraft that small? Again, I don't know. On the flip side, would some trunk lanes, especially during Peak, warrant throwing some Neffmobiles into the mix? Lots of options. So far, Amazon seems to be being very methodical about how it approaches the building-out of the network, so I don't expect anything too crazy to come down the pike. But I guess we'll see...

 

The reality is that Atlas does plenty of ad hoc charters into far away places. Kalitta doesn't have a monopoly on those trips.

The other reality is that if our pilot groups don't work together, management will squash us like bugs. Negotiating contracts with provisions that undercut each other can ONLY work to management's advantage.

You can try to justify it with all the examples you want, but the reality remains that unless we have a coordinated strategy, we end up working against each other.

And nobody wants that.

8

 

That was certainly the word that was going around at the time. But it was earlier in the process. I don't know if it makes any difference in your analysis, but I don't think that the proposed ownership interest was strictly-speaking "in exchange for" flying. Amazon would actually pay real dollars for the shares it would plan to purchase, and the share purchase would be in order to enable Connie legally to dry-lease aircraft to Amazon and operate them for Amazon on a CMI basis.

Similarly, ATSG and Atlas, through their leasing subsidiaries, bought all the aircraft they are flying for Amazon, then put them to Amazon on long-term dry leases. Although the operation contracts are terminable on short-notice by Amazon, the leases aren't, so those companies end up making a profit on the deal even if the flying goes away, which is a lot less risky for them than if they bought planes and provided the service on a charter or ACMI basis.

Like I say, I don't know if it makes a difference, but that's a little-more precise detail...