Airline Flybe is to carry out its own baggage handling at Guernsey Airport.
The company said the move could lead to the creation of up to 50 jobs.
Flybe will be investing £1.5m in its ground handling operations on the island after the decision by Servisair to withdraw its own operation.
Servisair announced last month it was stopping its baggage handling service on 19 April, with the loss of 35 jobs, because it was no longer commercially viable.
Ticket restrictions
Flybe has spent the past few weeks considering how it would cope with the loss of Servisair.
Flybe said the £1.5m would be used for capital equipment, personnel and training.
Meanwhile, Flybe has suspended its proposed service between Guernsey and Jersey.
The airline revealed earlier this month that it intended to operate in direct competition with Rockhopper and the Guernsey States-owned airline Aurigny.
But the Guernsey Transport Board imposed a restriction where bookings could only be made in Guernsey less than 24 hours before people wanted to fly.
It said it was imposing the limits to ensure existing operators were unaffected.
Flybe said it would not now be flying between the islands until the booking restrictions had been sorted out.
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