Aust Post freighter aircraft ready for takeoff

Australia Post plans to use its own fleet of branded Qantas aircraft to provide faster and more flexible deliveries.

Australia Post chief executive Ahmed Fahour and Qantas chief Alan Joyce with the StarTrack freighter aircraft. Picture: James Morgan

Australia Post plans to use its own fleet of branded Qantas freighter aircraft to provide faster and more flexible deliveries to Australians making retail purchases over the internet as the next step in the expansion of a $500 million alliance between the two companies.

The new dedicated domestic air-freighter network will consist of six freighter aircraft featuring StarTrack livery that will be ­provided for Australia Post’s exclusive use by Qantas from July.

Five will come from Qantas Freight’s existing fleet and the sixth will be operated by Express Freighters Australia, Qantas Freight’s wholly owned subsidiary freighter management.

It will comprise one Boeing 737-400 aircraft, two 737-300s and three smaller British Aerospace 146-300 planes.

Australia Post chief executive Ahmed Fahour said the deal had been driven by the growth of the e-tailing market in Australia and by the postal operator’s desire to increase the speed and frequency of deliveries, especially in regional Australia.

Australia Post delivers 11 million items each week across its mail, parcels and Express Post ­operations.

“Online retail sales in the business-to-consumer market are hovering at 6-7 per cent of total retail sales in Australia. When I started at Australia Post in 2010 it was only 2-3 per cent,’’ he said, noting most products were small, lightweight boxes weighing between 1kg and 1.5kg.

“Unlike the more traditional business to business market, which is more focused on trucks and land transport, this is a market where speed of delivery is ­really important. The convenience of how we get items into people’s homes is fundamental.’’

He said having its own dedicated aircraft would allow Australia Post to “fill the planes any way we choose without having to trade off with anyone else”.

“We can add and expand the capacity as and when needed,’’ he said, noting the postal group generally experienced 20 per cent more volume on Mondays than other days of the week, due largely to online retail orders made over weekends.

He also said the evolution of technology was better linking the customer with the logistics ­provider.

“Being able to direct items to where customers want is where the future is,’’ he said.

The battle in the $5.3 billion business-to-consumer logistics market in Australia is intensifying as the likes of the Japan Post-backed Toll Holdings, DHL Express, Star Track Express and UPS compete for market share against Australia Post.

But Mr Fahour said the new air-freighter network would give Australia Post a new competitive advantage by servicing nine destinations and 80 locations across the east and west coast of Australia, including key parts of regional Australia.

Qantas Freight also services 500 international destinations.

“Our source of differentiation is that we serve all Australians. Most of these competitors are cross-town metro services. We service regional and rural,’’ he said.

“The average regional and rural customer also buys three times more online items per capita than someone living in the cities. They don’t have the shops and services that the cities get. Regional and rural Australia is one of the most important reasons we have done this.’’

Qantas chief executive Alan Joyce said Australia Post would continue to have priority access to Qantas and Jetstar plans, including QantasLink and Jetstar aircraft flying to regional communities.

“That is why this works for the regional community,’’ he said, noting it was also part of a new global trend for airlines to have dedicated freighters for different customers based on their size.

Mr Fahour added: “I feel like we now have the entire Qantas fleet as well as dedicated freighters.’’

Qantas took full control of air-cargo business Australian Air Express in 2012 after an asset-swap deal that involved Australia Post buying the airline’s half share of road-freight business Star Track Express.

Last year, the airline signed a five-year contract, with a value in excess of $500 million, for the transport of Australia Post’s domestic mail, parcels and Express Post until mid-2020.

“If things continue to grow, it could be a lot bigger than that,’’ Mr Joyce said.

The Qantas freight operation generated earnings before interest and tax of $38m in the first half of 2016 from its fleet of 14 aircraft.

Australia Post and Qantas have been working together since 1922. “This five-year deal takes us close to the 100th anniversary of this partnership,’’ Mr Joyce said.