Flying high: Cargo airlines are expanding their fleets during the pandemic

All over the world, airlines are parking and retiring airplanes, because passenger numbers have dropped to near zero. One kind of airline, however, is doing the opposite, adding new aircraft even as entire fleets are grounded forever: the major U.S cargo carriers. They are buying dozens of new jets and scooping up used ones, looking to meet demand from rising e-commerce sales and, in the short term, to make up for the loss of cargo space in the holds of passenger planes, which typically carry freight as well as passenger luggage.

A case in point is UPS Airlines, which made waves among aviation followers last week when it said it was buying a handful of used MD-11s, jets that have been taken out of passenger service in the last decade. The addition was surprising because the MD-11 is a three-engined airplane, an odd choice at a time when most airlines are choosing two-engined jets for their increased fuel efficiency.

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"The MD-11s are part of an expansion of our fleet to meet growing customer demand, primarily from e-commerce," UPS Airlines public relations manager Jim Mayer said in an email.

But the MD-11s have two very attractive features: They can haul a lot of cargo, and they are cheap. "A very cost-effective purchase," Mayer said, adding that UPS is buying them from Boeing, which merged with their original maker, McDonnell Douglas, in the 1990s.

UPS Airlines, the air freight arm of UPS, isn't stopping there, and is adding 13 more Boeing 747-8 freighters, too — new ones, delivered directly from Boeing. With 15 already in the fleet, UPS Airlines will become by 2022 the biggest operator in the world of the 747-8, the latest — and likely last — version of the famous Jumbo Jet. And on top of that, there are 22 Boeing 767s coming.

"We are not retiring any aircraft," Mayer said. UPS is currently flying 265 planes, the second-biggest all-cargo fleet after FedEx Express. UPS will add more than 12 million pounds of lift capacity to its fleet, most of it to meet growing e-commerce demand. "Next Day Air package volume grew by 20.5% in the first quarter of 2020, the fourth consecutive quarter of double-digit increases," Mayer said. That's a much faster growth than the average daily volume shipped by air and ground on UPS in the U.S., which was up 8.5% in the quarter.

Rival FedEx Express is also flying most of its planes, unlike passenger carriers, with 431 of its 450 planes currently in service. It has 73 on order, between 767s and 777s it's also buying new from Boeing. The third largest by fleet size among U.S. cargo-only carriers, Atlas Air, is currently flying at least 69 of its 79 jets, according to fleet-tracking sites.

But while cargo carriers are flying a lot of packages, they also face a drop in demand for shipping other goods, with UPS and FedEx warning that the pandemic is hurting profits. Both companies reported declining net income in the first quarter of the year. FedEx, for example, has seen a boost in demand since most passenger planes — which in normal conditions carry about half of the world's air cargo — were grounded. But the world economy is shrinking, and that will hurt cargo carriers too. "Due to weakening economic conditions in Europe and the United States and resulting decreases in demand for goods manufactured in Asia, there are no assurances that these increased levels of demand will be sustainable," FedEx said in a statement.

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The growth of e-commerce is fueling the growth of another all-cargo airline, one which threatens to take a big piece of the air deliveries of packages bought online: Amazon Air.

Amazon made half of its own deliveries last year, meaning the big cargo airlines are doing fewer of them even as e-commerce booms. Retail sales in the U.S. grew 2.1% in the first quarter of 2020 compared to the previous year, while e-commerce sales grew 14.8%, government statistics show. And if Amazon Air — formerly known as Amazon Prime Air — eventually does all of its own shipping, that spells trouble for the established players: UPS depends on Amazon for almost 12 percent of its revenue, according to figures cited by Reuters.

Related reading: Inside the Boeing 737 that will fly your Amazon packages around the US

In fact, Amazon Air's fleet of jet freighters is growing so fast that it has become as big as the coronavirus-diminished fleets of some major passenger airlines. Amazon's own airline flies 43 jets as of today, according to fleet-tracking sites — small fry compared to the big players, but still as many airplanes as Lufthansa, which currently flies only 43 due to reduced demand. The airline owned by the world's largest online retailer has become, at least until passenger traffic recovers, comparable in size to the flag carrier of Germany, Europe's biggest economy.

All of Amazon's planes are converted 737s and 767s that used to fly passengers and have been turned into package haulers instead. That feels like a perfect representation of the changes in commercial aviation wrought by the pandemic: while people stay home, the goods they increasingly buy online fly on airplanes that used to carry travelers.