PRIME AIR PILOTS TO PROTEST AT AMAZON HEADQUARTERS, SOUND ALARM ON GROWING RISKS TO COMPANY’S AIR DELIVERY SERVICE, LOGISTICS AMBITIONS



7-31-2017

FOR IMMEDIATE RELEASE: July 31, 2017
CONTACT: Desmond Lee, desmond.lee@berlinrosen.com, (646) 517-1826

PRIME AIR PILOTS TO PROTEST AT AMAZON HEADQUARTERS, SOUND ALARM ON GROWING RISKS TO COMPANY’S AIR DELIVERY SERVICE, LOGISTICS AMBITIONS



Veteran pilots responsible for flying Prime Air planes say their airlines are not on track to meet shipping demands in the fast-approaching holiday season



SEATTLE – Pilots who fly for Amazon Prime Air will protest at the e-retailer’s headquarters on Tuesday to warn CEO Jeff Bezos, other Amazon executives and customers about the intensifying challenges at their airlines and the potential risks for Amazon’s growing logistics operations, especially as the aviation and e-commerce industries make preparations for peak flying season.

The pilots’ employers, Atlas Air Worldwide Holdings (AAWW) and Air Transport Services Group (ATSG), are contracted to fly 40 planes for Amazon Prime Air by 2018. Yet full implementation of this first phase is now delayed, and the companies have struggled to get many of these planes off the ground due to extreme staffing shortages.

“Prime Air pilots are taking our concerns about staffing shortages at our carriers to Amazon executives because we want Prime Air to succeed,” said Captain Robert Kirchner, a long-time Atlas Air pilot. “We are losing a record number of pilots at an unsustainable rate due to sub-standard pay and benefits, and unless something is done to tackle these issues, the future of Prime Air is at stake. Our airlines are playing with fire by undercutting pilot standards at a time when the country faces an unprecedented pilot shortage, and we hope Amazon will tell our airlines it’s time to get serious about working with us to resolve the staffing crisis and protect their new business venture.”

The pilots say issues simmering beneath the surface at their airlines and across the air cargo industry threaten to undermine the success of Prime Air, particularly as the company prepares for the demanding fourth quarter and holiday shipping season. Just last year, contract violations and severe short-staffing issues led pilots at one of the Prime Air carriers, ABX Air, to go on strike at the start of holiday season, creating what Fox Business called a “rocky start” for Prime Air.

In addition to marching with signs reading, “Can Amazon Deliver?” and “Don’t Ground Prime Air!”, the pilots will be accompanied by a truck-mounted mobile billboard that will travel the streets near Amazon’s campus reading, “No Amazon Prime Air Without Pilots” and “Prime(d) for Disaster – Fair Contract Now!” The billboard will point people to the pilots’ website, CanAmazonDeliver.com, which details the growing issues at the Prime Air carriers. The site also includes tools for customers to ask Amazon executives to make sure its contracted pilots have a fair contract to strengthen their ability to deliver for customers.

In what industry experts are calling a “slow burning crisis” that has airlines of all sizes and types scrambling to cope, the pilots and experts say a looming pilot shortage not only threatens to disrupt operations at airlines across the country, but poses a significant challenge to the success of Prime Air. The effects of this crisis have already started to have significant ramifications for consumers - most recently, Horizon Air, a subsidiary of Alaska Air Group and a major regional carrier in the Pacific Northwest, was forced to cancel more than 300 flights this summer due to a “severe shortage” of pilots for its Q400 turboprop planes.

At the same time, the realities of the pilot shortage combined with substandard pay and years-long delays in union contract negotiations have also triggered significant problems at the Prime Air airlines. Management at both AAWW and ATSG are undercutting industry-wide standards in everything from pay and wages to working conditions, eroding pilot morale and undermining the companies’ ability to attract and retain experienced pilots.

Conditions at Atlas Air, one of the Prime Air carriers and a subsidiary of AAWW, have created turnover, recruitment, and retention issues that could undermine the airline’s commitments to Amazon. Since the start of the year, Atlas’ efforts to hire more pilots have come up alarmingly short – though it has hired approximately 180 pilots thus far in 2017, the company has lost more than 100 pilots in the same period. Atlas has seen nearly as many pilots leave the company in the first half of this year as it did in all of 2016.

ABX Air, a subsidiary of ASTG and a Prime Air carrier, also faces a critical need to attract new pilots as Amazon’s logistics ambitions grow. Absent a stable pipeline of new pilots, the airline could see increased staffing issues extending over the course of the next decade and throughout the duration of its contracted flying for Amazon, as 20 percent of its current pilots will reach the mandatory retirement age in the next five years. That number is expected to surge to more than 50 percent in the next 10 years.

Earlier this month, pilots raised these concerns directly with customers in the lead up to Prime Day, Amazon’s biggest single-day sales event, with a nationwide advertising campaign. The ads linked to CanAmazonDeliver.com.

In May, pilots protested at the company’s annual shareholder meeting to alert investors of what Quartz described as “bad news in the cutthroat world of e-commerce.” These challenges were also outlined in a letter to the Amazon Board of Directors from International Brotherhood of Teamsters General Secretary Ken Hall, which called on the company to work with pilots and the union on solutions to these problems.

Amazon has signaled an increased investment in creating and growing its logistics arm. The e-retailer broke out revenues for its logistics operations for the first time in the first quarter of 2017, and earlier this year, the company announced that it will construct a $1.5 billion hub at Cincinnati/Northern Kentucky Airport (CVG) and will partner with German shipping giant Deutsche Post DHL to leverage the shipper’s existing resources at CVG. Amazon has also inked numerous deals to lease freighter aircraft to build out its air cargo fleet and is rumored to be in discussions to purchase as many as 400 new Boeing 767s. The company has also secured warrants to purchase substantial equity in AAWW and ATSG, driving speculation among some analysts that the tech giant may consider acquiring its cargo contractors in the near future.

At the same time, growing issues bubbling beneath the surface at Amazon’s cargo contractors and across the logistics industry threaten to derail the success of Prime Air. Carriers of all types are facing a nationwide pilot shortage that could leave airlines scrambling to replace tens of thousands of pilots expected to retire in the coming years.

Simultaneously, extensive delays in union contract negotiations and years of substandard pay continue to fuel problems at Prime Air’s contractors, including staffing, attrition and recruitment issues at AAWW. In a recent survey of Atlas pilots, 65 percent of surveyed pilots said they were planning to apply to another airline in the coming year. Many are looking to FedEx and UPS, major delivery companies that offer competitive benefit and pay packages, and that Amazon is relying on less and less for its Prime Air business.

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The Airline Professionals Association, Teamsters Local 1224 represents pilots and flight crewmembers from 11 airlines operating across the country.