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Amazon Air Network Looking More and More Like FedEx, UPS

Amazon Air’s continued flexing of its Kentucky and broader Ohio Valley network positions the company to carve out increased market share in the third-party delivery space, according to a research report released this week from DePaul University.

The company grew the number of flights at its Cincinnati/Northern Kentucky International Airport (CVG) hub between March and September even as Amazon’s overall air network growth slowed in response to post-pandemic online shopping trends. 

Amazon Air boosted daily flights out of its Kentucky hub, which opened last year, from 25.6 to 43.9 between March and September, according to the bi-annual Amazon Air Briefs report released by DePaul University’s Chaddick Institute for Metropolitan Development. When researchers factored in contractor planes, daily flights totaled roughly 60. 

The nearby Wilmington Air Park sees 20.4 flights daily, down from 24.2. The two airports, when factored together, offer broader insight into Amazon’s focus points.

“This airport pair—and CVG in particular—are increasingly the nerve center of Amazon Air’s domestic operation,” Chaddick Institute’s researchers said, adding the two airports now handle 21 percent of the U.S. Six months ago the two claimed a 14 percent share of the domestic market.

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The researchers went on to say the Cincinnati/Northern Kentucky air hub now looks similar to the FedEx and UPS hubs in Memphis and Louisville when accounting for flights taking off between the hours of midnight and 6 a.m., which researchers said increases the ability for next-day fulfillment. 

It’s key as the company continues to expand the number of businesses using its fulfillment services and its Buy with Prime program, which offers Prime shipping benefits to members buying outside of Amazon.com.

“We expect Amazon to garner a larger piece of the delivery business being handled by FedEx, UPS and the U.S. Postal Service that does not involve purchases on its online platform, in part due to rollout of Buy with Prime and Fulfillment by Amazon,” researchers said. “We do not expect, however, that the company will announce any plans to broadly enter the consumer-to-consumer segment anytime soon. This would require both larger-scale investments in facilities to collect parcels and a change in the orientation of Amazon Air.” 

The growth of the Kentucky hub also came with the addition of airports in El Paso, Texas; Las Vegas; and Lihue, Hawaii during the report’s six-month study period. The moves continue to place Amazon closer to more and more U.S. consumers. Amazon Air, as of September, is now within 100 miles of 73.4 percent of mainland consumers. That stood at 60 percent a year and a half ago, researchers found.

While certain airports are seeing growth or being added, the Amazon Air network’s overall expansion has slowed. Total flights counted by the Chaddick Institute increased 3.8 percent between March and September. That was down from the prior six-month study that determined a 14.3 percent increase in flights. 

“These trends indicate that Amazon has adjusted to a ‘new normal’ and taken decisive steps to adjust from overly optimistic estimates about the need for facilities and warehousing,” the report said. 

That’s consistent with statements made earlier this year by chief financial officer Brian Olsavsky, who pointed out that the fulfillment network, both in terms of warehouses and labor, had grown rapidly in response to the online surge during the pandemic. A correction is now underway to reduce the excess capacity that was brought on in 2020 and early 2021. 

Earlier this month Amazon filed plans to close two warehouses in Maryland next month, laying off 353 workers. The company’s also shelving plans on a number of other facilities, according to supply chain and logistics consulting firm MWPVL International.