Amazon Leasing Air Cargo Space, Delivering by Drone

Amazon air plane

Amazon, facing a continued slowdown in its ecommerce business and under pressure to boost flagging sales, is looking to sell excess capacity on its commercial cargo jetliners used to move goods among its network of warehouses here and in Europe, Bloomberg reports.

In unrelated aerial news from Amazon, the company has begun making drone deliveries in Texas and Washington state, as has (no coincidence) Walmart, in Texas, Florida and Arizona, according to various media.

Amazon has reportedly hired executives with experience marketing air cargo assets, sources told Bloomberg, to sell capacity on deadhead return flights, for example. The company launched Amazon Air in 2016, prompting rampant speculation it was chasing much-larger UPS and FedEx fleets for dominance in retail/ecommerce air freight services.

That never materialized, but it does have 100 planes here and in Europe to move its cargo around, and hubs at regional airports near concentrations of its warehouses.

According to Bloomberg, the International Air Transport Association (IATA) is projecting air cargo sales will decline by $52 billion in 2023 to $149.4 billion, which is $48.6 billion more than in 2019. FedEx, as part of its plan to shed $4 billion in costs by 2025 to offset losses from declining volume, will ground more flights this year.

On the drone front, Amazon began making aerial deliveries in mid-December to residents of Lockeford, CA, near Sacramento, and College Station, TX, home of Texas A&M University, according to Ars Technica. The company received approval from the Federal Aviation Administration for the deliveries in August. Maximum payload is 5 lbs., representing 85% of its ecommerce deliveries.

“First deliveries from our new sites in TX and CA,” said David Carbon, a former Boeing executive and vice president of Amazon Prime Air, in a LinkedIn post. “Couldn’t be prouder of the amazing people that make up Prime Air. These are careful first steps that we will turn into giant leaps for our customers over the next number of years.”

According to a March 2022 report from McKinsey & Co., over 660,000 commercial drone deliveries were made since 2019, with more than 2,000 deliveries per day worldwide.

The FAA has been watching Amazon’s progress closely, and the program has not been without incident. There were eight crashes of Amazon drones in 2022, Business Insider reported, some causing damage, and the company reportedly tried to hide the incidents from the agency.

Walmart, meanwhile, has expanded its drone delivery services to 23 cities in six states, via partner DroneUp. Deliveries come within 30 minutes for a $3.99 fee.

“Drone delivery makes it possible for our customers to shop those last-minute or forgotten items with ease, in a package that’s frankly really cool,” said Vik Gopalakrishnan, Walmart U.S. vice president of innovation and automation, in a statement.