Amazon Air cuts ties with Silver Airways
Amazon’s private airline that outsources cargo flying to third parties has ended its partnership with Silver Airways, a small regional carrier that operated five small ATR72-500 turboprop planes on small feeder routes, FreightWaves has confirmed.
Silver Airways, a privately held regional airline based in Fort Lauderdale, Florida, that operates passenger service in the Southeast, the Bahamas and the Caribbean with small propeller aircraft and seaplanes, began flying under contract with Amazon (NASDAQ: AMZN) in November 2021. It moved packages between cities such as Des Moines, Iowa; Albuquerque, New Mexico; Wichita, Kansas; and Omaha, Nebraska, and Amazon’s regional hub at Alliance Fort Worth Airport in Texas.
An Amazon spokesperson said that Amazon is no longer working with Silver Airways. No explanation was given for the decision, and the online retailer didn’t indicate if it will find a carrier to replace Silver.
“We’re always evaluating our operations to better serve our customers. None of the changes we’ve made will impact our customers’ experience,” the company said in a statement to FreightWaves.
Silver Airways could not be reached for a response.
Amazon no longer needs the short-haul air transport provided by Silver Airways as the company transitions to a regional, rather than national, fulfillment model, said Derek Lossing, founder of Cirrus Global Advisors, in a LinkedIn post. Under the new eight-region model, a good truck line haul can perform as well as the aircraft at lower cost and little-to-no impact for customers in small markets, he added.
Aviation publication Cargo Facts was first to report Amazon had terminated its contract with Silver Airways, which supplied the aircraft and operated and maintained them.
Carriers that fly under the Amazon umbrella are ABX Air and Air Transport International (both owned by Air Transport Services Group ), Atlas Air, and Sun Country (NASDAQ: SNCY) Hawaiian Airlines (NASDAQ: HA) will begin flying cargo jets on Amazon’s behalf starting in the fourth quarter. ASL Airlines provides dedicated carriage in Europe.
Amazon has scaled back the torrid pace of growth of its air network over the past year as the pandemic boom in e-commerce sales cooled to normal levels but has modestly increased flight activity while package carriers FedEx and UPS are flying fewer hours, according to analysts.
Amazon Air flew 7% more month over month in April after a 3% dip in April, but increased flights by 10% from the same period in 2022, Morgan Stanley said in a research note. FedEx (NYSE: FDX) flight hours have decreased 12% year over year, while UPS’ (NYSE: UPS) aircraft utilization is down 2%.
The correlation between demand and flight hours is not as strong as with two express carriers because FedEx and UPS fly for paying customers while Amazon Air mostly hauls goods being stocked in Amazon warehouses, which is a function of online consumer sales. Amazon is still building out its air network to ensure full national coverage and the ability to fulfill orders within a day, while FedEx is downsizing its network to increase efficiency.
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Twitter: @ericreports / LinkedIn: Eric Kulisch / ekulisch@freightwaves.com
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