An Amazon-branded Boeing 767 freighter, nicknamed Amazon One, flies over Lake Washington during the Seattle Seafair Air Show on August 5, 2016 in Seattle.
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One of AmazonMajor air cargo operators said on Monday the e-commerce giant was cutting flights this year, citing weaker demand and slower economic growth.
Air Transport Services Groupwhich handles a significant portion of Amazon’s air freight fleet, said it plans to operate Boeing 767 freighters dedicated to Amazon and DHL service at reduced schedules and less flight time per plane.
“Both companies are adjusting their U.S. ground and air distribution and fulfillment networks to conform to reduced U.S. economic growth and consumer spending levels in the first half of 2023,” the ATSG said.
Air freight rates, which have surged in recent years due to port congestion and high demand for fast deliveries, have fallen. The Baltic Air Cargo Index was down more than 33% on January 30 from a year earlier. The International Air Transport Association said last month that air cargo demand in November was down nearly 14% from the year-ago period, while capacity fell 1.9%.
Meanwhile, passenger airlines said travel demand held steady as consumers prioritized travel and other experiences.
But after Amazon’s weakest year for growth in its quarter-century as a public company, CEO Andy Jassy has taken steps to cut spending. This includes the loss of more than 18,000 jobs, the suspension of warehouse expansion and the closure of some projects.
Amazon has grown its fulfillment and logistics network at a breakneck pace during the Covid pandemic as demand for e-commerce surged. Since then, rising inflation and slowing consumer spending have forced Amazon to downsize. The company has weighed selling excess space on its cargo planes to other airlines, Bloomberg reported last December.
The ATSG said Monday that Amazon could not extend its leases on five Boeing 767-200 freighters, which are due to expire between May and September. Amazon has elected to continue leasing four 767-200s through 2024, he added.
Shares of ATSG fell 9% in afternoon trading. Amazon’s stock fell about 1%. A representative for the ATSG did not respond to a request for comment.
After the story was published, an Amazon spokesperson said in an emailed statement that the claim that the company was reducing flights “due to weaker overall demand and economic growth slow is wrong”.
“As part of our annual planning, we regularly reduce our flight schedules at this time of year to account for typical post-holiday fluctuations and aircraft maintenance,” the spokesperson said.
In October, Amazon hired Hawaiian Airlines to fly large leased Airbus cargo planes and said it would retire some older planes.
Using Amazon Air, the company has established a burgeoning air network to control more aspects of the delivery process and ensure faster delivery. She invested in ATSG and Atlas Air Worldwide Holdings, although Atlas last year agreed to be taken private by a group of investors. Amazon has also entered into a contract with a passenger airline land of the sun providing crews and aircraft to fly packages. The online retailer typically leases freighters from its airline contractors, but it has also purchased used jets from Delta and WestJet.
In addition to Amazon and DHL slashing their air freight schedules, the delivery giant fedex also announced cost cuts that include parking planes and cutting some corporate jobs.
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