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Amazon Air Coming to India

Amazon is bringing its air cargo service to India.

The e-commerce giant has partnered with Indian all-cargo airline Quikjet to debut Amazon Air to several cities in the South Asian nation. Amazon Air will use two Boeing 737-800 aircraft to ship “thousands” a packages per day in the 1.4 billion-strong consumer market.

Bengaluru, Hyderabad, New Delhi and Mumbai will be the first cities to be served by the air cargo operation. The introduction of a dedicated air cargo service should give the e-commerce giant tighter control over shipments in the country, while reducing delivery times across a wider range of products. Third-party aircraft will remain in use outside of these major cities.

The move follows Amazon’s decision in November last year to open up its Amazon Shipping transportation and logistics network to third-party merchants, businesses and direct-to-consumer brands in the country.

“We’re thrilled to launch Amazon Air in India to ensure we can provide our growing customer base with great selection, low prices, and faster deliveries,” said Sarah Rhoads, vice president, Amazon Global Air, in a statement. “This announcement reaffirms Amazon’s commitment to invest in India’s logistical infrastructure, create more jobs in the local economy, and introduce newer capabilities to power our delivery network.”

Although Amazon confirmed the Indian Air launch to Sourcing Journal, the company has not revealed the size of the investment, or additional expansion plans for the program.

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India is the third market, after the U.S. and Europe, where the company has launched Amazon Air. The Seattle firm, which started the service in 2016 in the U.S., operates a network of more than 110 jets that fly to over 70 locations worldwide.

In India, Amazon has fulfillment centers across 15 states, providing 43 million cubic feet of storage space for seller inventory. Sortation centers operate across 19 states, with a processing area of nearly 2.3 million square feet. Through its last-mile network, deliveries are enabled to 100 percent of the country’s serviceable pin codes—comparable to ZIP or postal codes in the U.S.—with customers in over 97 percent of eligible areas now receiving their packages within two days of placing an order.

K.T. Rama Rao, industry minister for the Indian state of Telangana, formally announced the Amazon Air launch at Hyderabad’s Rajiv Gandhi International Airport (RGIA) in front of several high-profile Amazon executives, saying the debut would strengthen Amazon’s distribution network and enable faster delivery to customers.

Referencing the continued growth of India e-commerce during his announcement, Rama Rao told Amazon, “the two planes you are launching will not be enough. I’m sure you will need to add a few more to the fleet.”

“In the long run, of course, it will also help onboard more sellers from Telangana and the rest of India on Amazon’s global e-commerce platform,” he added.

Increasing air traffic at RGIA is likely to hit the 40 million passengers mark by 2028, according to Rama Rao. Volumes in Hyderabad also increased by 35 percent in 2021, he pointed out.

In a tweet, Rama Rao, also known by the initials KTR, rattled off some of Amazon’s major victories in Hyderabad, including a new Amazon Web Services (AWS) data center in the city. Overall, AWS alone will invest $4.4 billion in the market.

“Telangana offers a conducive environment for the development of multi-modal connectivity and I take great pride in the fact that Hyderabad has emerged as a major hub for e-commerce distribution and supply chain activities,” Rama Rao said. “We have been working towards strengthening the state’s air cargo infrastructure, and we welcome the launch of Amazon Air, which will further assist in making Hyderabad a cargo hub for the country and will create additional employment opportunities in the state.”

Akhil Saxena, vice president, worldwide customer service at Amazon, said that the Amazon Air launch would support 1.1 million sellers in India, enabling growth for ancillary businesses such as transportation and packaging.

Quikjet, a unit of Ireland-based ASL Aviation, already operates one plane for Amazon in India. ASL operates several aircraft for Amazon in Europe.

The Amazon Air debut comes months after the tech titan shut down three business units in India, including wholesale unit Amazon Distribution, online food delivery service Amazon Food and educational online platform Amazon Academy.

Amazon has long sought to become a powerhouse in India, competing directly with e-commerce incumbent Flipkart, which is majority owned by Walmart. Amazon has invested an estimated $6.5 billion in the country, with $1 billion in capital pledged for Indian small businesses.

But the company has still encountered hurdles in the region, particularly on the legal front. India’s antitrust agency has accused Amazon of anti-competitive business practices such as skirting local e-commerce regulations and giving preferential treatment to specific sellers.

Amazon has also been involved in a drawn out legal battle with Indian retail conglomerate Future Group since late 2020, due to the latter’s decision to sell retail banners like Big Bazaar to Reliance Retail, the market’s largest brick-and-mortar retail business. The sale did not go through, but an Indian court later determined Future Group could still seek new ownership upon filing for bankruptcy.

The Air expansion into India comes as Amazon is reportedly trying to sell unused space on its cargo planes at home to recoup on its Covid-era investments.

According to a Bloomberg report earlier this month, Amazon retained experts experienced in marketing cargo space to help make use of its 100-plane fleet’s excess capacity.

Amazon Air’s overall expansion is slowing in a trend that correlates with faltering fulfillment demand, which has resulted in the subleasing of warehouses and even facility closures and layoffs on top of broader corporate job cuts. Total flights via the Amazon Air network, monitored by the Chaddick Institute, increased 3.8 percent between March and September. The increase is a major deceleration from the prior six-month study that determined a 14.3 percent increase in flights.