E-commercial tech giant Amazon Inc is making an effort to sell excess space available on its cargo planes to combat the post-pandemic period that has been hampering many companies with slow growth and job cut.
Amazon has around 100 planes in the continents of America and Europe. In previous months, it has hired many executives, those who possess the knowledge and experience in marketing cargo space for airlines.
According to people familiar with the matter, the plan includes filling empty jets that will return from Hawaii and Alaska, carrying pineapples and salmon.
The company is under pressure to boost profit from the unused space as the company intends to make money to cover up the loss expenses, a person familiar with the matter revealed.
Amazon disclosed the air cargo service in the year 2016 that promises to deliver goods overnight and to compete with its rival company United Parcel Service Inc. and FedEx Corporation.
The air cargo services of Amazon operate in smaller regional airports that are close to its warehouses around the country. It helped the Seattle-based company quickly move goods to accommodate one and two-day delivery.
Industry experts are confused by the firm’s actual objective after reading contradicting details concerning Amazon’s intentions. Early on, the company experienced significant growth, and a $1.5 billion investment in a facility at Cincinnati/Northern Kentucky International Airport encouraged suspicions that it was preparing to launch an overnight delivery service.
Other investors stated that despite having more planes and airline connectivity that won’t affect Amazon’s main online retail company, major carriers like FedEx and UPS still exceed Amazon by a huge margin.
This year’s decline in air cargo business is predicted to continue in 2023. IATA, a trade organization for aircraft, predicts that the market will produce $149.4 billion in sales, which would be around $52 billion less than in 2022 but nevertheless $48.6 billion greater than in 2019.
Researchers with DePaul University’s Chaddick Institute for Metropolitan Development have been analyzing Amazon Air flights since 2020, and they discovered that in September, they expanded at their lowest levels since the outbreak began.
Amazon declared in October that it planned to add 10 Airbus A330-300 cargo planes starting in 2019 through a collaboration with Hawaiian Airlines, amid declining demand. Two of the individuals claimed that Amazon intends to shrink its fleet significantly by not renewing a number of its flight leases with Air Transport Services Group.
As consumers return to their pre-pandemic spending patterns, even the biggest package carriers are reducing expenses, reducing the pressure on the shipping sector. On December 20, FedEx revealed intentions to reduce spending by $3.7 billion next year. Among some of the cost-cutting measures include the use of digital tools to rebalance flights between company-owned airplanes and lifts from third-party carriers.
According to one of the persons, Amazon is giving space on its aircraft along with charter flights. The plan, which involves subletting extra storage space and slashing 10,000 jobs, is the newest recent change to tackle declining internet sales and an unstable economy that may be heading toward recession.