
Amazon to start air delivery network with leasing deal - antr
http://in.reuters.com/article/air-transport-sr-amazon-com-idINKCN0WB1PK
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saosebastiao
This is something the carriers have known was coming for a while and I
wouldn't expect it to hurt their bottom line much (and it might end up being a
benefit). When you cater to dominant customers like Amazon, you end up
operating around their peaks and valleys. Amazon buys so much that if the
carriers wanted to keep up with Amazon's demands, they would probably suffer
utilization hits whenever Amazon is not peaking.

If Amazon assumes the risks of volume variation, they gain a lot of scheduling
flexibility (flying later at night, etc.), and they can better level load
their volumes across their carriers and themselves. This is a win for both
Amazon and their carriers.

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brianobush
In the short term, this is probably true. However, can you see a future where
Amazon increases their own fleet to the point where it hurts other carriers? I
certainly do.

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saosebastiao
I think in the long term you can expect to see Amazon directly competing with
other carriers in retail parcel delivery, so yes.

However, the carriers have a very difficult job, and contrary to popular
belief, they are phenomenally cost efficient given the constraints placed on
them. Amazon may try to undercut on price, but given the cash flows and
margins of large carriers, _any_ significant pricing discount would introduce
negative cash flows that could cripple even a behemoth like Amazon. And by
significant, I mean anything more than 2-3% off of the rates that UPS or FedEx
charges.

Given the constraints and inherent difficulty of the business, I would imagine
the impact would be no different than if DHL tried to re-enter the US market.

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JBReefer
UPS is a miracle in motion, go to a bit distribution center sometime.

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hamburglar
I heard back in January that amazon was hiring up ups managers like crazy and
forming a partnership with ATSG. Would have been a good time to buy ATSG,
which has jumped quite a bit on the news.

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ChrisBland
As someone who worked in retail distribution in a past life, I wonder if this
is simply an easier way to move product between their distributions centers.
If goods land on the east coast they can fly them straight to the west coast
and vice versa. It also gives them ability to rebalance their DC inventory as
the planes would just be going point to point. The details they didn't release
which have me wondering, who is going to handle the loading / unloading? Are
they planning on building their own sites at airfields or are they going to
contract that out?

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brianwawok
Planes are what 100x the price of trucks per pound? For just rebalancing send
trucks. Or more realistically make a new order for the other coast.

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ac29
Based on shipping stuff via overnight air and normal ground frequently, I'd
guess the difference is more like 5-10x.

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6stringmerc
I think it'll be very interesting to see the compensation that Amazon gives
its pilots. Personally I like well paid, well rested pilots as a general
principle. It's also a good thing from an insurance/liability perspective. A
767 coming down into anywhere populated is a rather scary proposition, as
we're probably all too aware.

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cylinder
Pretty sure these are wet leases and the lessor provides crew.

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throwaway_xx9
US Regional/Charter airline pilots used to be horribly underpaid until the new
ATP experience requirements in 2015.

Go Airlines just signed a new pilot contract for $60k/year for pilots and $35k
for co-pilots.

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Someone1234
> Go Airlines just signed a new pilot contract for $60k/year for pilots and
> $35k for co-pilots.

That's still insanely low given how much pilot training costs. I've heard
figures over $35,000 to go from unqualified to a commercial pilot, and that is
if you shop around and look for some free flight hours. It could easily exceed
$40K is you're in a rush.

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wohlfea
When you think about it, it's not really that much different in
salary/investment than say your average liberal arts degree. What's crazy to
me is how low the pay is for someone who is directly responsible for other
people's lives.

