Virgin Australia nets $150 million TNT freight deal

Virgin Australia’s plan to increase its annual freight revenue to $150 million has received a big boost.

The new Virgin Australia logo on the tail of one of the Airbus A330 aircraft during announcement of rebranding from Virgin Bl...

Virgin Australia’s plan to increase its annual freight revenue to $150 million has received a big boost after the airline finalised its exclusive deal with TNT to haul cargo around the nation for the next five years.

The deal that will take effect from July and was announced in February as a heads of agreement will be a blow to Qantas which previously held the lucrative contact.

The freight market in Australia is dominated by three players — Australia Post, Toll and TNT — which account for more than 80 per cent of domestic air cargo volume.

With Qantas holding long-term contracts with Australia Post and Toll, it was imperative that Virgin snare TNT if it was ever to hit its aspiration of growing its freight unit into a $150m-a-year business by mid-2017. The finalised deal will see Virgin Australia Cargo establish a dedicated freighter network with two British Aerospace 146 aircraft and a single Boeing 737-300.

Both freighter aircraft will be operated by wet lease providers which will operate planes and provide crew on Virgin’s behalf.

Virgin Australia Cargo, which was launched in July last year, offers more than 3400 flights per week through access to the Virgin Group’s network of 47 domestic and 16 international destinations.

The win, although significant for Virgin’s freighter ambitions, comes amid a softening of the global freight market. According to figures from the International Air Transport Association, cargo volume expanded by 2.2 per cent last year compared with 5 per cent growth in 2014.