Shakeup down under

Changing business relationships in Australia and New Zealand are having a big impact on the air freight scene.

Virgin Australia has for some time had an agreement with Australia-based forwarder and logistics services provider Toll Group, under which Toll managed the carrier’s Australian cargo (and used the Virgin Australia fleet to move much of its own cargo), but that agreement will expire on 30 June, when Toll (recently acquired by Japan Post) will switch its freight to Qantas. In response, Virgin Australia will officially launch its own Virgin Australia Cargo on 1 July, to compete in the Australian domestic cargo market. Virgin Australia operates a large 737-800 fleet, plus six A330-200s in domestic service, but does not operate freighters. Virgin Australia’s international cargo business will continue to be managed by Virgin Atlantic.

But in addition to its contract with Virgin Australia (now switching to Qantas), Toll also has also had a contract with New Zealand-based air transport services provider Airwork, under which Airwork operated three 737-300Fs in regional service for Toll. That contract has now been extended through mid-2022, and the new contract calls for the replacement of two of the three 737-300Fs with 737-400Fs, plus an option for replacement of the third. For Toll, the move obviously indicates growing cargo volumes in the Australia/New Zealand region, and for Airwork it is further justification of the company’s decision late last year to acquire seven 737-400s and have them converted to freighter configuration by Aeronautical Engineers, Inc. Airwork recently said it had already signed binding agreements to lease three of the -400Fs to “well established operators in Europe who contract mostly to global parcel carriers and major postal agencies,” so the agreement to put at least two more into service with Toll is icing on that cake. (Although it leaves open the question of finding a new home for the -300Fs when they are replaced by the larger -400Fs.)

And in yet more good news for Airwork, the company said it had reached an agreement to lease yet another three 737-400Fs to a new combined network created by NZ Post and New Zealand-based express company Freightways. Airwork said the freighters will be leased to a new entity operated jointly by Airwork and Ferightways subsidiary Fieldair under a ten-year contract. The 737-400Fs will replace Fieldair’s aging fleet of five Convair CV580 turboprop freighters as well as lift currently contracted by NZ Post.

And the driver for the decision to move to the 737-400Fs? No doubt you are getting tired of hearing it, but NZ Post and Freightways both indicated they needed the increased capacity to keep up with growing demand for express delivery arising from online shopping.

To learn more about freighter fleet dynamics, click here.