Toll offshoot drops Virgin contract as losses mount
The end of the contract raises the possibility of job losses at Toll Dnata, which has a 1200-strong workforce in Australia. The airport services firm is a joint venture between Toll Holdings and Dubai's Dnata Group.
Toll Holdings has revealed that the airport services provider sank into the red in the year to June largely because of "significant losses" on the Virgin contract. It said it expected Toll Dnata's performance to improve in the new financial year, once the Virgin contract ends next month.
Toll Dnata also incurred costs this year from the construction of facilities in Sydney and Melbourne.
The ground-handling industry is known for its slender margins. The Virgin contract involved Toll Dnata doing baggage handling, check-in and other customer-service roles for Virgin's international flights, including short-haul services to New Zealand and the Pacific islands. The work was at Sydney, Melbourne and Brisbane airports.
Now Virgin will do a large portion of the work, including passenger check-in. The rest of the work for international flights, including ramp handling, will be outsourced to ground-handling company Aerocare.
The return of a large part of the work to Virgin defies an industry trend whereby airlines have increasingly turned to cheaper third-party operators like Aerocare and Menzies Aviation for ground-handling services.
A Virgin spokeswoman said the airline was "constantly looking for ways to improve our customer experience while maintaining a low-cost base".
Toll Dnata recently signed a deal with Air New Zealand, Virgin's biggest shareholder, for passenger and ramp-handling services.
Frequently Asked Questions about this Article…
Toll Holdings’ airport services offshoot, Toll Dnata, has ditched a large contract with Virgin Australia after suffering “significant losses.” The contract covered baggage handling, passenger check-in and other customer services for Virgin’s international short‑haul flights at Sydney, Melbourne and Brisbane.
Toll Dnata sank into the red in the year to June largely because of significant losses on the Virgin contract. The company also incurred extra costs from constructing new facilities in Sydney and Melbourne, and the ground‑handling sector is known for its very slender margins.
The end of the contract raises the possibility of job losses at Toll Dnata. The article notes Toll Dnata has a roughly 1,200-strong workforce in Australia, but it does not confirm specific redundancies.
Virgin will take back a large portion of the work, including passenger check‑in. The remaining international flight work, such as ramp handling, will be outsourced to third‑party ground‑handling company Aerocare.
Toll Holdings said the airport services provider’s losses on the Virgin contract pushed it into the red for the year to June. The company expects Toll Dnata’s performance to improve in the new financial year once the Virgin contract ends next month (as stated in the article).
According to the article, Aerocare will be outsourced to handle much of the remaining ramp and international flight work. The article also mentions other industry players like Menzies Aviation as common third‑party operators.
No. The article says the return of a large part of the work to Virgin defies the broader industry trend, where airlines have increasingly turned to cheaper third‑party operators such as Aerocare and Menzies Aviation for ground‑handling services.
Yes. The article notes Toll Dnata recently signed a deal with Air New Zealand to provide passenger and ramp‑handling services, which could help offset the impact of losing the Virgin contract.
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