Amazon’s Prime Air Encroaching on Turf Dominated by FedEx and UPS

With a growing fleet of Boeing 767s, and big plans for drone deliveries, is the package delivery landscape poised for a transformative shakeup?

Amazon Prime Air 767
Amazon unveils its new "Prime Air" branded Boeing 767 airplane at Seafair
Amazon's fleet of Prime Air branded Boeing 767s is expected to grow to 40 aircraft.Amazon

Look out, FedEx and UPS. Prime Air is here.

Jeff Bezos’ Amazon.com is getting into the package delivery business in a big way with the public unveiling of its first Boeing 767 in a fleet of Prime Air branded cargo airplanes in Seattle for a service that is expected to grow to 40 aircraft.

The e-commerce giant, which has helped fuel growth at FedEx and United Parcel Service, now wants in on the action. And some are even asking whether Bezos’ big bet on aviation, first with cargo planes and soon possibly with drones, could transform the package-delivery business model.

“Will Amazon Kill FedEx?” was the headline yesterday at Bloomberg.com for a piece that told the story of Prime Air’s quiet ascension. Amazon’s first-ever branded cargo plane, Amazon One, is a Boeing 767-300 operated by cargo service provider Atlas Air. This is one of dozens of airplanes Amazon will lease from Atlas Air and another partner, ATSG. Amazon is currently using 11 of the cargo jets and said it plans to roll out more planes in the fleet later this year.

Amazon insists it has no plan to fully replace its logistics partners. But with Amazon taking a sizable chunk of the market for itself, and with its ability to expand beyond its own Amazon Prime customer base, there’s no question FedEx and UPS are facing a potent new competitor.