Air Transport Services Group (ATSG) President and CEO, Joe Hete, has disclosed more details on the fleet of 20 B767 freighters that will be flying on behalf of Amazon Fulfillment Services, Inc. following the announcement of agreements yesterday to operate an air cargo network to serve Amazon customers in the United States.
Speaking at the company's Q4 2015 earnings call yesterday, Hete said that the 20 767 freighters will be delivered by mid-2017 within the framework of a 'landmark agreement' with Amazon.
He also shed light on where the Amazon freighters would be coming from:
"If you look at our fleet, we are operating five of them for them (Amazon) today. The additional 15 would be: four returns that we have coming from current dry leases, and three that we had in other ACMI operations And then we will buy eight 767 300s to fill out the additional 15."
Asked if the 20 aircraft for Amazon was a 'minimum' number and could be upsized subsequently, Hete said:
"Well obviously, if the network is successful, we would hope that there would be some additional expansion opportunities there. But we'd defer that question to Amazon."
Hete was also asked if ATSG had had to get the approval from DHL, currently its major customer, to do the Amazon deal, to which he replied:
"No, there is no requirement for us to get DHL's approval. However, obviously we advise them of what the opportunities are there. Our position is that, potentially, there are some synergy opportunities between the two companies, with us being kind of the neutral in the middle.
"So we think it would be beneficial for DHL. Obviously, they have been our primary customer for a long time. We expect to maintain the same relationship with them going forward, and this is just another opportunity for us to provide better service and more competitive costs for all of our customers."
Asked to elaborate on the possible expansion opportunities with Amazon and whether there was a way of quantifying, how much (air) capacity they (Amazon) currently use and what percentage of their US lift is accounted for by the five aircraft ATSG operates for them today, Hete replied:
"I don't know about that…..We don't have any insight to that…..We have no idea."
As to reaction to the ASTG-Amazon tie-up from the express distribution and logistics players, Deutsche Post DHL Group CEO Frank Appel, said at an analysts' call yesterday:
"It's been known for a while that this (deal) might happen. We have not seen the schedule (covered by the deal) but we think it's domestic US business. So it's better to ask the two parties (UPS and FedEx) and others in the US about what they think about it."
"The interesting thing is that it obviously confirms our choice of operator in the US and beyond for a while now (ATSG) and that means it (ATSG) is recognised as a very good operator and we are very satisfied with the service quality."
As for FedEx, in reply to questions from CEP-Research on whether Amazon's agreements with ATSG were likely to change its (FedEx's) existing business relations with the online retailer which is a major customer of the company and/or affect future relations, the Memphis-based package delivery giant said:
“The announcement is not a surprise. We work closely with Amazon and have been aware for some time about their need for supplemental air capacity related to inventory management. Amazon continues to be a valuable FedEx customer.”
No one was immediately availbale to comment at UPS on the ATSG-Amazon deal.
