Virgin Australia will launch its own cargo service from 1 July following the end of its current contract with the Toll Group on 30 June. The move is a part of the Group’s Virgin Vision 2017 strategy.

The launch of Virgin’s own cargo service will bring it in direct competition with Toll and Qantas in the air-freight market. Virgin has a strategy team in its Sydney office that concentrates on freight. The company is currently targeting revenue between US$150 million and US$200 million from its cargo business by 2017, reported the Sydney Morning Herald.

From July 1, Virgin will sell and manage the belly space in the passenger fleet of its Boeing 737, Airbus A330 and Embraer E190s, as well as Tigerair Australia’s A320s and the ATR turboprops and Fokker fleet of Virgin Australia Regional Airlines.

Cargo sales on Virgin’s fleet of five B777-300ERs, which fly to Los Angeles and Abu Dhabi, will continue to be managed by Virgin Atlantic.

Virgin Australia Cargo group executive Merren McArthur said: “Virgin Australia will now actively compete in the domestic and short haul international cargo market for the first time. 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.”

He also said Virgin would tap into the cargo expertise of its alliance partners such as Singapore Airlines, Etihad Airways and Air New Zealand as it builds up its cargo unit.