The decision by Toll to change its air freight supplier from Virgin to Qantas looks set to bring changes in freight buying patterns. Qantas announced the five year deal with Toll, which said to be worth $100 million per annum to the airline.
According to Toll, the express courier and freight business, Toll Priority, will be utilising Qantas, alongside its own air freight fleet of 40 aircraft.
The deal also means Qantas will now have contracts with Australia Post, Toll and TNT. These three are estimated to represent 80 per cent of the air freight market in Australia.
According to Virgin the move will dramatically change the competitive dynamics of the air cargo market in Australia. The airline explained the situation by spinning the story and suggesting it needed to disengage itself from an exclusive deal with Toll in order to enable it to cut out the freight company and deal directly with its freight customers.
“Virgin Australia will now actively compete in the domestic and short haul international cargo market for the first time,” said Merren McArthur, Group Executive Virgin Australia Cargo. “We will leverage the famous Virgin Australia customer focused culture to deliver exceptional service at competitive rates.
“We understand that reliability and price are key drivers of customer choice in the domestic and short haul international cargo market. These are both areas in which Virgin Australia excels and so Virgin Australia Cargo will be well placed to compete in this market.
“In addition we have launched a state of the art IT system which will enable us to optimise our cargo capacity and provide tracking and customised reporting to our customers.”