Amazon pushes Airbus to compete with top rival Boeing
Demands from company giants such as Amazon and UPS have pushed Airbus to take bolder measures to compete with its main rival, Boeing. After a ten year slump in the air freight industry, it is gaining more popularity. Airbus is reportedly in talks to modify one of its aircrafts in order to be more competitive.
Since March, Airbus has reportedly been in talks build a freighter version of its model A330neo planes, though the company declined to confirm or comment. The France-based company has struggled to gain a foothold in air freight market dominated by Boeing, and the former recently lost a contract with Hawaiian Airlines. In partnering with companies such as Amazon and UPS, Airbus is looking to increase their relevance at a time when the US-based Boeing is refocusing their manufacturing energies on a military tanker variant of their 767 planes. Furthermore, Boeing does not have any planes to upgrade its 767 aircraft, which ceased production in 2014, and the 787 model that followed does not come in a cargo version. Airbus has trailed behind Boeing for years, having logged 5 times fewer orders (42 versus 196, respectively) over the past decade. †It is looking to modify its A330-900 planes to carry more cargo using less fuel, which would mean focusing on shorter distance flights.
Current trends in air freight delivery have tilted towards meeting the demand for fresh food and express parcel delivery. As the cost of transportation became cheaper, airline companies began purchasing more planes, and thus there was more cargo space available. As the supply outstripped demand, the cost of transportation slid. At the same time, the weight of cargo freight became lighter. Transportation of electronics made up 50% of air cargo, but as electronics became smaller and lighter, and the final-assembly manufacturing plants moved closer to their customers, the industry struggled as it lost over 12 billion in revenue from 2011 to 2017. Today, as eating and shopping habits reflect ďon demandĒ consumer attitudes, the air freight industry is experiencing new growth, with the volume of perishables such as fruit and vegetables increasing by almost a third. This growth has been undoubtedly fueled by the presence of the e-commerce giant Amazon.
Amazon approached Airbus to gauge the possibility of transporting more cargo using less fuel
Amazon is looking to purchase at least 40 planes in order to build its ďPrime AirĒ fleet. The acquisition of an air fleet will dramatically reduce Amazonís dependence on UPS and Fedex, and allow for increased shipping automation. An air hub, with an estimate cost of $1.5 billion, will be built near Cincinnati, and the sheer scale of the project indicates Amazonís massive ambition. The Seattle-based company was originally reported to be considering acquiring a fleet of 767s, but reports show that Amazon approached Airbus in order to gauge the possibility of transporting more cargo using less fuel. †
As a solution, Airbus decided to modify the passenger version of the A330neo, its smallest, wide-body member of its fleet. Sales were disappointing, with only 214 aircraft ordered. The aircraft was only a slight upgrade from its predecessor, the A330ceo, and even used the same amount of fuel. By upgrading the A330neo to use less fuel, it could potentially position Airbus to gain when the 767 eventually retires. †
Both companies must deal also with inexpensive conversions of their planes from passenger to freighters. As planes are retired, they can either be scrapped or repurposed. Cargo carriers tend to care more about cost and capacity over performance. Airbus already has a conversion program, and sold its first passenger-to-freighter aircraft to DHL Express, a competitor to UPS and Fedex.
It is up in the air as to whether the modification to the A330-900 model would position Airbus to take more market share, but it certainly indicates an important shift in the air freight business.
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