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Virgin Australia is to form a new cargo arm on July 1 after losing its contract with Toll Holdings, which had previously managed its belly space. Toll shifted its exclusive deal to Qantas, which now has three of the largest customers in the domestic market, TNT, Australia Post and now Toll (now owned by Japan Post), which has signed a five-year deal. As a result, the airline has said it will manage its own cargo capacity in its regional, domestic and short-haul routes, while Virgin Atlantic Cargo will continue to manage its long-haul belly space.

Virgin Australia group executive for cargo, Merren McArthur, told media that the airline’s cargo division had failed to maintain the same growth rate as the passenger side of the business since the carrier switched to becoming full-service.

“Our business model has changed, but we haven’t seen the growth in take-up of cargo on our capacity that we would expect with that sort of change in business model,” she said. “We have taken the decision that we really need to take back control of our own assets and leverage them, and extract the maximum value from them, because they are currently under-utilised.”

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