Amazon launches freight service Air in India

Amazon has launched Amazon Air, its dedicated air cargo fleet, in India as the e-commerce giant bulks up its logistics infrastructure in the key overseas market where it has deployed over $6.5 billion.

The retailer has partnered with the Bengaluru-based cargo airline Quikjet to launch its maiden air freight service in the country, which it said will enable the firm to speed up its delivery.

Amazon, which is utilizing the Boeing 737-800 for the service, said it will initially use Amazon Air to deliver goods in Delhi, Mumbai, Hyderabad and Bengaluru. An Amazon executive described the launch of Amazon Air as a “huge step forward for the aviation industry” without explaining how.

This seems like a big step for Amazon. I understand it’s all leased etc. I am just not familiar enough with the Indian market to be able to say what the future here is, but I’m sure for the Indian consumer having an alternative to Flipkart is not a bad thing.

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India is a big place with slowish ground transport, long distance (road and rail). You can see this in various documentaries on the internet (and popular TV like Ice Road Truckers India although that’s more mountain/rural)

To get speed of delivery you would need to create a network of warehouses in major population centres to hold stock, or have a widespread marketplace of local stockists and adjust the buy box towards rapid delivery instead of price/marketing spend. But that only works for more commodity products (presumably lower value products).

Amazon seems to be taking a CapEx light, OpEx heavy approach. Instead of lots of warehouses (each with thin or not so thin stock cover) it is increasing rapid parcel and bulk capacity in-between major population centres instead with aircraft. That works for a while, eventually creating the volume which will support more regional warehouses.

Reading between the lines of the news release, Amazon is “wet leasing” (ACMI) from an existing Indian airfreight carrier, so the initial outlay and ongoing liability is low (pay as you go model). I’m not sure how Amazon Air operates in the US–does Amazon has it’s own AOC, how “wet” or “dry” are the leases.

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