Amazon Considering Starting Own Express Airline

[MrFedEx]

Maybe.

You sure seem to have a lot of admiration for Fred's soul brother.

Not at all. I think he runs Amazon the same way Smith runs Express...with an iron fist and a wallet that is seldom opened for employees. Last years revelations about the Amazon warehouses and the more recent leaks about the psychotic Amazon culture are also revealing.

I'd just like to see him screw-up Fred's plans.

 

[Purplepackage]

Not at all. I think he runs Amazon the same way Smith runs Express...with an iron fist and a wallet that is seldom opened for employees. Last years revelations about the Amazon warehouses and the more recent leaks about the psychotic Amazon culture are also revealing.

I'd just like to see him screw-up Fred's plans.

It's not just those 2, the way they run a company is the new corporate standard. That matched with the price of a college education getting so ridiculously high is the reason your kids will never be able to move out. A few guys have there 30 year old kids still living with them and or moving back in because they can't afford to pay rent and bills on top of a crippling student debt, this is America

 

[59 Dano]

Who says it won't generate revenue?

There's no reason why it would.

 

[59 Dano]

This is what I don't understand. Amazon just recently started operating at a profit, am I not correct? That was with UPS and FedEx delivering their packages for pennies. Now they want to operate their own fleet of aircraft and take care of deliveries themselves, in turn taking on those costs themselves rather than have us and UPS do it for them.

While I have no doubt there are people much smarter than me over at Amazon who believe this is a sound business decision, I doubt Amazon is going to be able to deliver their own stuff for pennies on the package like FedEx and UPS does.

You're raising a great point that everyone else is missing. Amazon's profit margin (when it has one) is razor thin. It makes virtually nothing on selling / brokering the sale of physical goods. Its cloud-related business is a cash cow and shows no signs of slowing down. Money would be better spent in that segment vs using it to try to eke out a modest profit in a segment that has such high capital requirements and operating costs.

 

[59 Dano]

Maybe. But the real money is in the metropolitan areas where you can bulk-out a 767 with a 100% load factor and deliver the high value small items. I know that you love getting snow blowers and plow attachments for freight, but small and many all packed tight into cans is big $$$.

It generates the same amount of revenue whether it's full or emplty.

 

[SmithBarney]

The big difference is that Bezos already has most of the infrastructure. The fact he is only considering 20 planes limits his market, probably to the major metropolitan areas so he doesn't lose money delivering to Podunkville. Limit the service to LA, San Francisco, New York etc. and make cash where the buyers are, as opposed to the middle of nowhere. He can use FedEx and UPS to deliver the rural stops.

I'll bet he does it.

Right on... one day service to all major metros

 

[SmithBarney]

The crazy idea that you can successfully start and operate an airline that generates no revenue.

You mean just like FedEx Express...if you believe the line they've been feeding us for years that they make no money.... Whereas at UPS, they used to state that the NDA(and all other air products) carry the companies profit.

 

[59 Dano]

the price of a college education getting so ridiculously high is the reason your kids will never be able to move out.

The result of subsidizing college in one way or another to make it more "affordable" for everyone.

A few guys have there 30 year old kids still living with them and or moving back in because they can't afford to pay rent and bills on top of a crippling student debt, this is America

As they look down their noses at the plumber who went to a vocational school and paid as he went.

 

[59 Dano]

You mean just like FedEx Express...if you believe the line they've been feeding us for years that they make no money.... Whereas at UPS, they used to state that the NDA(and all other air products) carry the companies profit.

You're confusing revenue and profit.

 

[MrFedEx]

It generates the same amount of revenue whether it's full or emplty.

Wrong. A full aircraft loaded with small high-value shipments equals much higher revenue. Did you just say an empty plane generates the same amount of revenue? Smoking crack again?

 

[Brownslave688]

The result of subsidizing college in one way or another to make it more "affordable" for everyone.

.

It's purely the result of government backed loans.

 

[59 Dano]

Wrong. A full aircraft loaded with small high-value shipments equals much higher revenue. Did you just say an empty plane generates the same amount of revenue? Smoking crack again?

An Amazon Airlines plane generates the same amount regardless of volume: zero. The revenue from those packages exists regardless of who flies them because they were going to be sold regardless of who might fly them.

 

[vantexan]

An Amazon Airlines plane generates the same amount regardless of volume: zero. The revenue from those packages exists regardless of who flies them because they were going to be sold regardless of who might fly them.

Except now instead of paying FedEx enough per package PLUS a profit to operate an airline, they keep the profit for themselves. As Mr. FedEx pointed out, by sticking to major metro areas where most of the country's population is, they avoid having to handle the costs FedEx has eat in order to serve every rural outpost of the country. More profit for them. Doesn't sound like they're investing in as large a fleet as FedEx has, a further clue they'll stick to where the money is. A mgr once told me the New York metro area produces 11% of Express volume(this was before Ground). Obviously the big metro's are very lucrative for FedEx, and will be for Amazon also. Their profits on shipping packages is razor thin primarily because they're having to pay shipping costs on every package. You're in denial because you see the threat to YOUR cash cow. What goes around....

 

[59 Dano]

Except now instead of paying FedEx enough per package PLUS a profit to operate an airline, they keep the profit for themselves.

You're oversimplifying it. I can go to the supermarket and buy a bunch of vegetables. Alternatively, I can start my own garden and raise a bunch of vegetables for a fraction of the cost. In addition to the money, the former costs me a trip to the store, which is about 20 minutes.

The latter requires several hours of my time, some tools, the weather has to be cooperative, and I have to get dirty.

Amazon can do what they're doing now or they can take on the hassle of starting and running an airline in order to save the pittance they're paying above cost to FDX/UPS (1% or so per pkg).

Obviously the big metro's are very lucrative for FedEx, and will be for Amazon also. Their profits on shipping packages is razor thin primarily because they're having to pay shipping costs on every package.

And they always will. Owning and operating their own airline doesn't change the fact that they have to pay to transport packages. They are paying ridiculously discounted shipping charges now because of their volume and the fact that they are subsidized via thousands of other shippers who get little to no discount. The money they would save is, in theory, a fairly negligible amount.

The theoretical savings would be offset by the exposure to risk of operating an airline. There just isn't much of anything to be gained even if things run as hoped. There isn't a big inefficiency that they can take advantage of.

You're in denial because you see the threat toYOUR cash cow.

You the brokest person on here and it hasn't stopped you from trying to be the business expert! I admire your determination.

 

[vantexan]

You the brokest person on here and it hasn't stopped you from trying to be the business expert! I admire your determination.

I'm not trying to be anything, just pointing out the obvious. I believe they're contracting with another business to handle the airline aspect. And I'm betting that if this goes forward it's because they've got experts that have determined it's worth their while to do so. You're the one saying it won't work. What do YOU know that they don't? By the way, being broke is transitory. And I'm broke right now because your favorite company wouldn't restore my percentage of range even though policy clearly states that they could have in the situation I was rehired in. The best way to deal with that is to get away from this company which will surely happen. Meanwhile I'll keep pointing out that the quality of this company is demonstrated by the type of people who defend it.

 

[It will be fine]

The theoretical savings would be offset by the exposure to risk of operating an airline. There just isn't much of anything to be gained even if things run as hoped. There isn't a big inefficiency that they can take advantage of.

I think this will allow them to offer more items with prime shipping. That seems more inline with how they operate. Profits don't matter as much as gaining business to them. If they can crisscross the country themselves and pay ground shipping for final mile it opens up more items for them to break even on.

 

[bacha29]

Mr. Van Texan: When you travel to your new country, can I come along and be dropped off in Poland? The unbridled greed on the part of a growing number of American socalled "entrepenours' is why unlike the 20th century the 21st century will not be an American century. It will be a century of internal strife between the socio/economic classes in this nation.

 

[MAKAVELI]

Mr. Van Texan: When you travel to your new country, can I come along and be dropped off in Poland? The unbridled greed on the part of a growing number of American socalled "entrepenours' is why unlike the 20th century the 21st century will not be an American century. It will be a century of internal strife between the socio/economic classes in this nation.

Greed will be the death of this country.

 

[oldrps]

"Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind and greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the U.S.A."

---Gordon Gekko, Wall Street movie

 

[MrFedEx]

An Amazon Airlines plane generates the same amount regardless of volume: zero. The revenue from those packages exists regardless of who flies them because they were going to be sold regardless of who might fly them.

No. An Amazon plane full of small high-value packages equals a lot of revenue, because Amazon not only gets the money from the sale of the item, but they generate additional profit by providing timely, premium transport. Don't you think Amazon is going to tack-on a hefty charge that not only covers their costs, but also provides a profit? Obviously, they've done research that indicates that a lot of people are willing to pay through the nose to actually get it faster. Amazon Airlines isn't going to be carrying diapers, cat litter, and popcorn like we do.

I distinctly remember talking with a FedEx VP about "white gold", his term for OLs and Courier-Paks. They don't take-up a lot of space and don't weigh a lot so an airplane full of them would be much more profitable than a planeload of P1 boxes. Small and light equals big profits and no problems with lift capacity.

Your argument that the revenue exists regardless of who flies the packages ignores the fact that act of transporting them could be highly lucrative. In fact, FedEx enjoyed much higher profit margins when we were an "envelope airline".