Amazon announces plans to build regional air hub at Fort Worth Alliance Airport

Global e-commerce bellwether Amazon said this week it is working on building a regional air hub for Amazon Air in Texas at the Fort Worth Alliance Airport.

“We are excited to build a brand-new facility from the ground up at the Fort Worth Alliance Airport," said Amazon Air director Sarah Rhoads in a statement. “The new facility is the first of its kind for us and we're thrilled to ensure we have the capacity to continue to delight our customers.”

While the size of this new facility was not made public, Amazon officials said the new hub, which it expects to be operational next year, will create hundreds of new jobs, adding that unlike other gateways and facilities within Amazon Air’s network, the Regional Air Hub will be tailored specifically to Amazon Air’s larger scale regional needs. 

And it added that this hub will be constructed with the future in mind to include sortation capability and infrastructure to handle multiple flights daily. 

Amazon has been gradually building up its own air cargo network in recent years, with the objective being to support Amazon Prime members with fast, free shipping.

In March 2016, Amazon announced separate air cargo deals, one with Air Transport Services Group (ATSG) for Amazon to lease 20 Boeing 767 freighter aircraft from ATSG’s Cargo Aircraft Management, with the aircraft operated by ABX Air and Air Transport International.

That deal was quickly followed by another one it made with Atlas Air Worldwide Holdings, with Atlas providing air cargo services to support Amazon’s package deliveries to its customers. Specifics of this deal included Atlas operating 20 B767-300 converted freighters for Amazon on a CMI (crew, maintenance and insurance) basis by Atlas Air Inc., Atlas Air Worldwide’s airline subsidiary, in addition to dry leasing by its Titan Aviation leasing unit.

A key theme regarding Amazon, especially in recent years has focused on the company increasing its supply chain and logistics operational presence to meet high levels of demand, given the ongoing rapid proliferation of consumer-based e-commerce activity.

While UPS and FedEx handle a large amount of Amazon’s deliveries, Amazon has long been keen on taking more control of its supply chain. This was highlighted in 2014, when harsh winter weather, or the Polar Vortex, in 2014, contributed to a last-minute surge in e-commerce orders that delayed holiday season deliveries.

A May 2016 Wall Street Journal report explained that while it would likely take years for Amazon to establish its own delivery network, Amazon is a “major customer for both UPS and FedEx, helping drive volume growth at the delivery giants. Nonetheless, investors also fear Amazon might have ambitions to someday become a competitor in the market, poaching customers from the delivery giants.”

And Jerry Hempstead, president of Hempstead Consulting, told LM at that that time that the increasing pressure of delivery commitment time has put increasing pressure on integrators to devote significant airlift to Amazon to the point where the integrators don’t want, nor desire, to devote their resources to satisfy the needs of one demanding deeply discounted customer.

“The reality is that Amazon has needs, and they also have cost issues,” he said. “The integrators may no longer desire to add operational costs at the price Amazon is willing to pay, (this is especially true for aircraft lift) and that leaves Amazon to build out their own network.

"Could they then offer some of those services to other companies who need transport? Perhaps, but the question becomes, would the integrators allow Amazon to try to cannibalize their current customers. Would Amazon want other company’s packages compete for sales that Amazon could have achieved? Would offering service to third parties be a distraction to Amazon’s core vision?

"The good news for shippers is that the possibility of another service provider, even if it’s in the niche area of deferred residential deliveries is a good thing for everyone.”