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The Impressive Rise Of Amazon Air

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Search the news for Amazon Air, and you’ll find a number of stories regarding expansions and aircraft acquisitions. Formerly known as Amazon Prime Air, the growth of the eCommerce site Amazon and its dedicated fleet of aircraft is indeed nothing short of impressive. Let’s take a brief look at this five-year-old ‘airline’ and how it has reached its current pace of operations.

Starting off without an Air Operators Certificate (AOC) of its own, Amazon Air has actually worked with various airlines and their aircraft to move Amazon orders. It only attained its own AOC in 2020. Photo: Getty Images

Amazon: A brief background

It’s highly unlikely by now that you haven’t heard of Amazon – especially if you’re living in North America or Europe. Of course, there are parts of the world that Amazon has yet to dominate in the same manner.

For people living in those areas, Amazon is a multi-national eCommerce website that sells almost everything imaginable, either through their own suppliers or linking third-party vendors to customers. The Amazon ’empire’ has since expanded to include digital streaming, cloud computing, and its own consumer-level electronics.

Beyond long-distance delivery by aircraft, its eCommerce division aims to include short-distance delivery via drone. However, this has yet to fully materialize.

It was only in the last year that Amazon Air acquired its very own aircraft, rather than leasing. Photo: Nathan Coats via Wikimedia Commons 

Starting as Amazon Prime Air

It was back at the end of 2015 that Amazon began to play with the idea of having a fleet of aircraft dedicated to transporting freight.

This vision was solidified in March 2016, when Amazon acquired options to buy up nearly 20% of Air Transport International’s stock. According to The Times-Gazette,  the commercial agreements included:

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  • The leasing of 20 Boeing 767 freighter aircraft to Amazon Fulfillment Services Inc. by ATSG’s Cargo Aircraft Management (CAM);
  • The operation of the aircraft by ATSG’s airlines, ABX Air and Air Transport International;
  • Gateway and logistics services are provided by ATSG’s LGSTX Services.

The following year, it was announced that Amazon Air would make Cincinnati/Northern Kentucky International Airport (KCVG) its principal hub. 2017 also saw Prime Air rebranded to simply “Amazon Air,” mainly to distinguish it from its upcoming drone service, which will be named Amazon Prime Air.

Once known as Amazon Prime Air, the ‘airline’ rebranded to just Amazon Air in 2017. Photo: Patrick Feller via Flickr More planes, more facilities

For every additional year that Amazon Air has continued to operate, we have seen new announcements regarding the expansion of its fleet and facilities.

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  • December 2018: Amazon leased 10 additional Boeing 767-300 planes from ATSG
  • October 2019: Amazon completed its new regional air hub at Fort Worth Alliance Airport (KAFW)
  • 2019/2020: Amazon committed to leasing 10 additional 767-300 aircraft from ATSG

Additionally, Amazon has established gateway facilities in Riverside, CA, Alliance, TX, and Wilmington, OH. The company explains what these facilities do on their website, saying:

“The Gateways have dedicated parking spots at an airport in order to facilitate below-wing operations. This includes the offloading of our packages onto the ramp in order to continue to our final mile delivery. Amazon Air provides gateway operations at over 20 airports, making two-day shipping possible almost anywhere in the U.S.”

Amazon also now has operations at the Leipzig-Halle airport to ensure it can “delight [its] customers in Germany and throughout Europe.”

Amazon Air
WestJet’s Boeing 767s found a new life with Amazon as a freighter. Photo: Vincenzo Pace | Simple Flying

Finally getting its own AOC

The 2nd half of 2020 was a particularly special time for Amazon Air with the granting of its very own Air Operators Certificate. PaxEx.aero noted that this was followed by the acquisition of its first four cargo 767s operating under a direct registration rather than through a leasing agreement. The aircraft came from Canadian airline WestJet.

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Since then, the Amazon fleet has grown further, with news that it purchased 11 used Boeing 767-300 jets from Delta and WestJet in January 2021. All of this recent expansion has been made possible by increased eCommerce activity, spurred by the global health crisis.

The Amazon Air fleet is currently a mix of 737s and 767s, with many still operating through leasing agreements. Air Cargo News notes that a report from Joseph Schwieterman and Jacob Walls of the Chaddick Institute for Metropolitan Development predicts that the Amazon Air fleet will grow to 200 jets by 2028.

At its current pace, we wouldn’t be all that surprised if it reached this size a few years early.

What do you think? How fast will Amazon Air’s fleet of cargo jets grow? Let us know in the comments.

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Source: https://simpleflying.com/amazon-air-rise/

Aviation

Wow: Virgin Australia Sells 71,000 Domestic Tickets In 24 Hours

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Virgin Australia experienced one of its busiest days of domestic ticket sales in 20 years just after the Australian government’s A$1.2 billion (US$920 million) stimulus package went into effect. The enthusiasm was sparked by half-price flights offered on subsidized routes, which included flights to the Gold Coast from the cities of Melbourne and Sydney, among others.

Like other Australian carriers, Virgin Australia’s flight operations have been severely limited over the past year. Photo: Getty Images

71,000 tickets sold in 24 hours

Within the span of a full day, Virgin Australia sold enough tickets to completely fill over 400 of its Boeing 737-800s (which have 176 seats each). The hottest tickets were for subsidized routes, for which the airline halved its standard prices.

Swept up in the momentum and also experiencing large jumps in ticket purchases were other ‘full-price’ routes, which included Melbourne-Perth, Perth-Sydney, and Melbourne-Sydney.

“The overwhelming response from Australians demonstrates loud and clear that they are ready to get back in the air and travel and are a positive sign for the aviation and tourism sectors as they look to recover from the impacts of COVID-19,” -Virgin Australia statement via 7News.com.au

While Virgin Australia had the record-breaking day, The Islander reports that the country’s other airlines saw spikes in web searches during the same period. Searches for “Qantas”, “Jetstar,” and “Virgin” sharply increased from around midnight Thursday and spiking again at 06:00 Australian Eastern Daylight Time.

Both Qantas and Virgin Australia will benefit from the Australian government’s stimulus package. Photo: Simon_sees via Flickr 

The Australian government’s stimulus package

Announced in early March, the government support package includes A$200 million (US$152.6 million) for Qantas and Virgin Australia. Reuters notes that this funding will support the airlines from April to October, with the intent to help maintain mothballed aircraft as well as bring planes out of storage and support wages for international flying staff.

Another major part of the scheme, and the main reason for this story, is the government subsidization of 13 routes. Subsidization has meant that eligible airlines can offer half-price tickets. The impetus for the deal was to support airlines while encouraging domestic tourism at a time when international tourism has been hard hit. According to The Guardian, the routes are as follows:

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  • Sydney: flights to the Gold Coast, Cairns, Proserpine, Hamilton Island, Maroochydore, Uluru, Alice Springs, Launceston, Broome, and Avalon.
  • Melbourne: flights to the Gold Coast, Cairns, Maroochydore, Alice Springs, Uluru, Launceston, Devonport, Burnie, Broome, and Merimbula.
  • Adelaide: flights to the Gold Coast, Maroochydore, Alice Springs, and Kangaroo Island.
  • Brisbane: flights to Alice Springs, Uluru, and Launceston.
  • Darwin: flights to Cairns and Broome.
  • Perth: flights to Alice Springs.
  • Avalon: flights to the Gold Coast

The half-price fares were made available on April 1st and will continue to be offered until the end of July.

Having recently divested itself of its widebody Boeing 777s and Airbus A330s, Virgin Australia’s fleet is now completely comprised of Boeing 737s. Photo: Aero_Icarus via Flickr 

Hope for the best, plan for the worst

One key concern when it comes to domestic flight bookings is the ever-present risk of interstate border closures in the event of an outbreak during this global health crisis. While it’s hard to resist a good deal, it’s also wise to consider the possibility of such unwelcomed restrictions. Having flight bookings with flexible re-booking and cancelation policies will help greatly if such restrictions arise.

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Were you a lucky Australian resident who managed to secure a half-priced flight? Or did you try and miss out? Share your experience with us in the comments.

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Source: https://simpleflying.com/virgin-australia-domestic-tickets-boom/

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US Congressmen Call On DOT To Deny Norse Atlantic Airways Permits

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The Chair of the US House Committee on Transportation and Infrastructure, Peter DeFazio, and Chair of the Subcommittee on Aviation, Rick Larsen, have called on the US Department of Transportation (DOT) to deny permits for Norse Atlantic Airways to fly to the United States, citing concerns about the airline.

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Norse Atlantic wants to fly to the US with Boeing 787s, but it has ruffled some feathers. Photo: Getty Images

Members of Congress on Norse Atlantic Airways

Rep. DeFazio, a Democrat from Oregon, and Rep. Larsen, a Democrat from Washington State, have called on the DOT to deny Norse Atlantic Airways Operating permits on account that it is flouting labor protections.

Drawing on earlier language indicating opposition to the airline, Reps. DeFazio and Larsen have argued that, by organizing itself in a country outside of Norway, where there are strong labor laws, the airline is seeking to flout those laws.

Norwegian selling two 787s to Neos Air
Norwegian also used subsidiaries in other countries, which is a concern highlighted in the letter. Photo: Getty Images

Drawing strong comparisons with Norwegian

The two Congressmen believe the airline is doing this because one of its executives was a former executive at Norwegian, which used Irish and UK subsidiaries to operate long-haul low-cost flights between the US and Europe.

In the letter, the Congressman stated the following:

“Their long-haul low-cost business model was predicated on the use of pilots and flight attendants employed under short-term contracts and assigned to the Norwegian subsidiaries via third-party crew sourcing firms. In short, Norwegian exploited labor while enjoying the liberalized benefits of the U.S.-E.U.-Iceland-Norway open skies agreement and competing unfairly with airlines that do not subvert fair labor standards.”

Norwegian 787
Norwegian recently announced it would be ending long-haul operations. Photo: Vincenzo Pace | Simple Flying

Using Norwegian as a warning

The letter also urged the DOT to consider that Norwegian failed in its transatlantic operations. Between 2016 and 2019, the letter states that Norwegian incurred debt of nearly $7 billion.

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Norwegian is currently under bankruptcy proceedings in Europe and has decided to shut down its long-haul routes and focus on its flights within Europe.

Norwegian made a huge splash when it started transatlantic operations in 2016 between the US and Europe. Using a fleet of mostly Boeing 787 aircraft, the airline brought large numbers of customers across the pond.

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Norse Atlantic Airways has already indicated it will operate a similar model, using Boeing 787 aircraft it has signed leases for.

Boeing 787 Dreamliner
The Dreamliner is an efficient long-haul aircraft. Photo: Getty Images

US airlines breathed a sigh of relief

When Norwegian came into the transatlantic market, it followed its initial routes with plenty of growth. That growth put pressure on US airlines.

Now, without Norwegian in the market, airlines are breathing a sigh of relief. Without that low-cost competition in the market, airlines like United are bullish on their international exposure. Without Norwegian in the market, there is also room for plenty of existing airlines to move toward higher-yield transatlantic operations.

Norwegian 787
Norse will need to do what Norwegian could not: make long-haul operations profitable. Photo: Vincenzo Pace | Simple Flying

The return of transatlantic demand will depend greatly on the removal of travel restrictions between the US and Europe. Most airlines are focused on cargo with low passenger loads on flights to Europe currently. Only essential travel is permitted between the two areas.

Norse Atlantic is a startup to watch. It has the opportunity to massively grow to the size of Norwegian’s long-haul operations before it shut down, but doing so may come at a high cost and low profitability. It will have to make the long-haul low-cost model work to be successful.

For now, it is a waiting game to see how the DOT will respond to Norse Atlantic. US Congressmen are coming down on the side of the US airline industry, but the DOT may end up granting Norse Atlantic operating permission.

Do you think Norse Atlantic Airways should be allowed to operate between the US and Europe? Let us know in the comments!

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Source: https://simpleflying.com/us-congressman-norse-atlantic-permits/

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Frontier Launches IPO – How Can The Airline Benefit?

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American ultra-low-cost carrier (ULCC) Frontier Airlines has officially gone public. Pricing out at the lower end of its target share price, the airline is still expecting to raise over $200 million from the endeavor. Here is a look at how that could benefit the airline.

Frontier Airbus A320
Frontier Airlines is set to benefit from its IPO. Photo: Frontier Airlines

Frontier’s initial public offering pricing

Frontier Airlines announced its initial public offering of 30 million shares at a price of $19 per share. This was toward the lower end of the initial pricing for Frontier’s shares. The share consists of 15 million shares of commons tock offered by Frontier and 15 million shares of common stock to be sold by certain of Frontier’s existing stockholders.

Less the underwriting discount, commissions, and estimated offering expenses, Frontier will net proceeds of approximately $266 million. The sale of stock by the existing stakeholders will not raise Frontier cash. Overall, the net proceeds to both Frontier and the private stakeholders is expected to be over $500 million.

Frontier IPO
Frontier is now trading on the stock market. Photo: Frontier Airlines

The airline is being traded on the Nasdaq Global Select Market under the ticker “ULCC.” Since going public, the airline’s stock price has hovered between $18 and $19 a share.

The net proceeds

The amount that Frontier expects to receive is around $266 million. This is a respectable amount similar to the funding another airline IPO, Sun Country, received.

With $266 million, the airline can do plenty of things. Frontier ended 2020 with long-term debt of over $300 million. The airline can choose to pay down some of its high-cost debt with these proceeds. Or else, the money can be used to fuel expansion. The airline sees plenty of growth opportunities and has a sizable aircraft order book which costs money, and this funding can go a long way.

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Frontier A320
There is a lot Frontier can do with this money. Photo: Frontier Airlines

The current state at Frontier

Frontier Airlines is one of the carriers leading the way with capacity increases through the year. The airline’s top stations are Denver, Orlando, and Las Vegas. These are major leisure travel hotspots, but some of them also provide opportunities for Frontier to sell connecting flights.

Frontier serves over 300 nonstop routes touching around 110 airports. Using a low-frequency model, the airline targets mostly point-to-point leisure travelers.

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Frontier also sees plenty of room for growth. In the airline’s initial filing for an IPO, the carrier highlighted it had an opportunity to serve 518 additional domestic routes between airports within its existing network not currently served by a ULCC. This is a fascinating number, but it also raises the question of Frontier’s expansion.

Frontier AIrcraft
Frontier is a ULCC that generally operates on a low-frequency, point-to-point model. Photo: Getty Images

In the past, Frontier has not been very hesitant in terms of adding new cities and then cutting them if those flights do not provide the anticipated financial benefits. Moving forward, Frontier will face shareholders and stockholders that may temper some of those ambitions, but the carrier is still expected to add new routes. This is especially true as signs continue to point toward a summer surge, and the CDC outlines guidelines for vaccinated Americans to travel.

The airline is already making moves to become a more modern, fuel-efficient carrier with an eye on costs. The aging and comparatively expensive Airbus A319s will exit the fleet this year as the airline welcomes newer Airbus A320neo family aircraft. Those new jets will also feature lighter-weight seats that will save on fuel, which in turn saves on Frontier’s costs.

Frontier A320neo
Frontier has started taking delivery of aircraft with new seats inside. Photo: Frontier Airlines

Ultimately, Frontier has set itself up to do well in the future. The net proceeds from this IPO will go a long way in getting Frontier the cash influx it needs to survive the next few months and prepare to handle the increase in passengers expected over the summer. As the US airline industry starts to turn the page on the crisis, Frontier is expected to be one carrier that benefits early on from its mostly domestic and short-haul international leisure-oriented model.

Do you think Frontier made the right decision by launching an IPO? Let us know in the comments!

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Source: https://simpleflying.com/frontier-ipo-launched/

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Cheap ticket deal breaks Virgin’s all-time record, despite lockdown

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Virgin Australia 737-8FE(WL) Brisbane Airport VH-YIB
‘Trinity Beach’ arriving into Brisbane Airport as ‘VA957’ in some windy and overcast conditions. 1/10th sec pan for those who are interested.

Virgin sold more domestic tickets on the launch day of the government’s half-price ticket scheme than on any 24-hour period in its history.

The result came despite fears Brisbane’s recent snap lockdown, which ended on Thursday, would put people off interstate travel.

Domestic aviation has been pinning its recovery hopes on the federal government’s plan to supplement 800,000 half-price airfares for passengers to 15 destinations including the Gold Coast, Alice Springs and Kangaroo Island. It follows the end of JobKeeper last week.

Virgin said in a statement it sold 71,000 supplemented seats in the 24-hour period from 12:01am on 1 April. The top five routes were:

  • Melbourne to Gold Coast
  • Gold Coast to Sydney
  • Maroochydore to Melbourne
  • Cairns to Sydney
  • Adelaide to Melbourne

Destinations not in the scheme also received a “significant boost”, in particular, Melbourne to Perth, Perth to Sydney and Melbourne to Sydney.

“The overwhelming response from Australians demonstrates loud and clear that they are ready to get back in the air and travel and are a positive sign for the aviation and tourism sectors as they look to recover from the impacts of COVID-19,” said the business in a statement.

“As a sign of renewed confidence and pent-up travel demand for travel, more than 85 per cent of the new bookings have been booked for travel from May onwards.”

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Skyscanner also said direct interest in booking on Thursday were 25 per cent higher than the week prior, while web searches for “Qantas”, “Jetstar” and “Virgin” also leapt six-fold.

Greater Brisbane lifted its snap lockdown on Thursday at noon, following the state recording just one new case of community transmission.

Queensland Premier Annastacia Palaszczuk did though announce a slight increase in restrictions, which will require residents to wear masks indoors and a limit of indoor gatherings to 30.

The good news came shortly before NSW announced no new local infections across the state, too.

The half-price ticket scheme saw Virgin announcing fares from just $55 between Melbourne-Launceston and Jetstar offering tickets from just $32 between Adelaide and Avalon.

The updated list of destinations now includes Cairns, Townsville, Whitsunday Coast/Hamilton Island, Sunshine Coast, Darwin, Alice Springs, Hobart, Launceston, Devonport, Broome, Avalon, Merimbula, Adelaide, Kangaroo Island and the Gold Coast.

The fares are on sale until the end of July for travel until the end of September, with discounts applied automatically.

Both airline groups have also topped up the 15 locations with sales to other destinations and also extended fare flexibility in light of recent uncertainty.

The package of measures to support aviation in Australia also includes a new wage subsidy for those working in international aviation; cheap loans to small business coming off JobKeeper; and a six-month extension of the ‘RANS’ and ‘DANS’ supplemented routes initiative.

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Source: https://australianaviation.com.au/2021/04/cheap-ticket-deal-breaks-virgins-all-time-record-despite-lockdown/

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