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Amazon uses ‘ghost freighters’ to increase cargo flights over 30%

Europe expansion leads the way as air network supports faster delivery to more customers, report says

Amazon’s private cargo airline increased flight activity 31% in the past year, with much of the expansion recently happening in Europe to support the company’s e-commerce business, according to a new report from researchers tracking the retail giant’s air logistics operation.

The growth in European flight activity took place as Amazon (NASDAQ: AMZN) continued to build out its U.S. air network and position Amazon Air to potentially handle third-party freight beyond its current focus on fast inventory replenishment for warehouses and fulfillment centers. During the past six months, Amazon has also emphasized flight scheduling in more narrow bands at its Cincinnati and Wilmington, Ohio, hubs and begun to use turboprop aircraft to reach smaller markets.

“Its annual growth in flight activity is likely to hover around 20%-24%, which, while somewhat slower than in the recent past, is still impressive considering that Amazon Air is well over twice the size” it was two years ago, the report from the Chaddick Institute for Metropolitan Development at DePaul University forecast.

Amazon Air could surpass 100 aircraft in its fleet by year-end and is on track to have 200 planes in its system by 2028. Also in the cards is a potential strategic shift to large, intercontinental freighters to handle direct imports for Amazon’s retail business, the authors said.

Europe growth

Amazon Air is now conducting more than 38 flights per day serving eight cities in Europe with a combination of own-registered aircraft and flights with aircraft belonging to transport partners, the Chaddick researchers said.

Amazon relies on contractors to fly its freighters, most of which are registered to Amazon and are painted with the familiar light blue “smile” logo. By analyzing data on 4,500 takeoffs and landings from flight tracking sites during a six-month period, the Chaddick team discovered nearly identical flight itineraries for off-brand aircraft operated by partner airlines on Amazon’s behalf. These “ghost freighters” don’t work full time for Amazon but are used to complement the dedicated fleet.

Dublin-based ASL Aviation Holdings operates Amazon’s freighter fleet in Europe. Between August and March, Amazon Air’s intra-European flight activity grew from eight to 18 flights per day, with ASL-registered aircraft conducting up to two dozen similar daily flights. The increased tempo has been possible because ASL last year took delivery of an estimated seven 737-800 aircraft Boeing converted to pure freighters, based on previous company statements.

Researchers said they observed the greatest Amazon activity at Cologne-Bonn Airport in Germany and Paris Charles de Gaulle Airport.

Amazon builds out network

Overall, Amazon increased flight activity another 14.3% in the past six months to 187 flights per day, not including lift provided by air cargo partners, the research showed. On an annualized basis, package flights are up 31%. In the U.S., combined flight activity dipped to 13% because Amazon deployed more leased aircraft and use of partner flights grew slower than in Europe. Most of the new flights are connected to the Cincinnati/Northern Kentucky International Airport (CVG) and Wilmington hubs, as well as regional hubs in Seattle, San Bernardino, California, and Fort Worth, Texas.   

Growth in Daily Amazon Air Flights

Intra-Canada activity remains steady at about 16 flights per day.

Amazon’s spread puts 73% of the U.S. population within 100 miles of an airport served by Amazon Air, up from about 70% last summer and 60% a year ago.

Amazon Air currently has 88 all-cargo aircraft in its fleet, 15 more than in August, about two-thirds of which are Boeing 767s. Most of the rest are 737-800 narrowbody aircraft. Silver Airways, a small passenger airline, last fall also began operating five ATR72-500 turboprops for Amazon.

The airline serves 47 airports in North America, up from 41 in August. Silver Airways operates shuttle runs between Fort Worth Alliance Airport and Albuquerque, New Mexico; Des Moines, Iowa; Omaha, Nebraska; and Wichita, Kansas. 

The turboprops tend to support next-day package delivery, departing in the middle of the night and returning around dawn, whereas departure times for larger aircraft fluctuate based on inventory needs within the network, the report said.

Amazon, like other importers, uses international ocean and air services to bring manufactured goods into its distribution system but has the scale to command capacity from vendors. Cargo Facts reported last fall that Amazon is considering acquiring large Boeing 777-300 and Airbus A330-300 freighters, after they are converted from passenger configuration, to handle more of its intercontinental shipments.

“We feel that significant transoceanic flying is coming, due to the mounting supply chain problems facing nearly all retailers and the sheer scale of Amazon’s logistical needs. Bringing more transoceanic shipping ‘in-house’ will give it heightened control over its supply chain,” the report said. “Changes to its supply chain will be gradual and likely take the form of experiments to help Amazon assess the benefits and costs. We believe the airline will move slowly into transoceanic flying over the next two years, likely with a dozen or fewer planes, but the longer term could bring a much more robust expansion.”

Amazon already has ownership stakes in partners Atlas Air Worldwide (NASDAQ: AAWW) and Air Transport Services Group (NASDAQ: ATSG), which also fly internationally for other customers.

Next-day hub?

The Chaddick report said Amazon appears to be developing a more hub-centric model, with flights arriving and departing at times calibrated to support fulfillment at critical times of the day, similar to how FedEx Express and UPS function. So far, however, Amazon has not dramatically rerouted traffic to feed its new “superhub” at CVG, which is operating at a quarter of its stated capacity of 100 flights per day.

CVG and Wilmington Air Park complement each other, with most flights arriving midday in Cincinnati and bookending the midnight hour in Wilmington. 

Amazon operates about nine flights per day to Chicago Rockford International Airport, down from 16 a year ago. The report authors, led by Chaddick Director Joseph Schwieterman, theorized the decline is due to less dependence on airport tenant UPS to help connect its network and possible diversion to Chicago O’Hare airport because it is closer to many Amazon warehouses in the metropolitan area.

Amazon Air doesn’t appear to play much of a role in Amazon’s Fulfillment by Amazon warehouse and distribution service for third parties, but its expansion could lead to more direct competition with FedEx and UPS. Amazon is equipped to handle second- and third-day delivery from a single point anywhere in the U.S. but would need air support to provide next-day delivery, the Chaddick report said.

Amazon’s air network could allow a shipper that tenders a load at 7 p.m. in Cincinnati to have the packages delivered by the next afternoon, or early evening, to points in all of the 25 largest U.S. metropolitan areas, with next day delivery covering 90% of the U.S. population, the analysis indicated.

With the addition of a half-dozen airports to its network, Amazon could provide second-day day delivery to the entire U.S. mainland, it said.

The findings are tempered by the fact that Amazon isn’t prioritizing the integration of its hubs to support late-night airplane-to-airplane transfers similar to FedEx and UPS. The company doesn’t have the capability to offer universal next-day delivery to third parties with inventory in Cincinnati because it has yet to shift most flight activity at its major hubs to late-night schedules needed to conduct the proper sorting. Only about 30% of flights currently depart between 11 p.m. and 6 a.m., the prime hours for FedEx and UPS flights. And Amazon apparently isn’t partnering with DHL Express, which operates an adjacent hub at CVG, to support the creation of a large-scale third-party next-day delivery network.

“We expect Amazon to seek a greater piece of the delivery business being handled by FedEx, UPS and the U.S. Postal Service that does not involve purchases on its online platform. We do not expect, however, that the company will announce anytime soon plans to broadly enter the consumer-to-consumer segment. That would require both large-scale investments in facilities to collect parcels and a change in the orientation of Amazon Air.

“Instead, it will focus on providing business-to-consumer delivery for companies that can stock inventory at several locations or need only second- or third-day delivery – while prioritizing enhancing overnight and same-day delivery options for the massive numbers of Amazon Prime subscribers,” the Chaddick report said.

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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at ekulisch@freightwaves.com