Amazon is building a $1.5 billion hub for its own cargo airline

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Need another sign that Amazon is dead serious about building a giant logistics network to challenge UPS and FedEx? The online retailer will open its own cargo air hub in Northern Kentucky, where it plans to employ 2,000 people, it announced today.

The Amazon facility will be the eventual home to 40 Amazon Prime Air planes the company is leasing to transport packages between its own warehouses. Amazon said 16 of the planes are already in service.

The Cincinnati Business Courier pegged the cost of the project at $1.49 billion and said Amazon is in line to get $40 million in tax incentives from local governments. The company has received approval to lease 900 acres in total, the publication reported.

Amazon has said it began leasing planes to keep up with customer demand for packages that shipping partners like UPS can’t. CEO Jeff Bezos has said that Amazon isn’t trying to compete directly with UPS, though the Wall Street Journal has reported otherwise.

The company’s foray into air cargo has come with some bumps. This holiday season, hundreds of pilots that operate Amazon’s planes went on strike to protest understaffing issues.

Beyond planes, the company has also bought thousands of its own truck trailers and is also starting to act as an ocean freight shipping operator to move goods between China and the U.S.

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