Qatar Airways Cargo is looking to reshape the way the airfreight industry approaches Block Space Agreements (BSA) to build a system that is mutually beneficial for all business parties.
BSAs, which enable the customer to reserve a predetermined volume of space on a carrier’s aircraft, have been seen by some as advantageous due to the price stability, guaranteed capacity and greater collaboration it generates. However, it leaves both sides at risk of financial losses if market dynamics change, as can quickly happen in the industry, or create operational complexities when unforeseen challenges arise.
Qatar Airways Cargo has decided that it makes more sense to have a more collaborative agreement when it comes to BSAs. Specifically, the carrier is looking to put bounds on the upside and the downside, adjusted for fuel, that would allow the customer or carrier to adjust the agreement, so that neither party feels like they’re being unfairly treated by the relationship.
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“My goal is to make sure all of our relationships, all of our partnerships, are mutually beneficial,” Mark Drusch, Qatar Airways’ Chief Officer Cargo, told Air Cargo Week.
“I have no desire for a partner to lose because something’s gone backwards in the economic environment.
“At the same time, I’m responsible for making sure our company doesn’t lose out, so I want to build something that’s mutually beneficial in the event something occurs beyond what we expected.”
Win-win
Having spent his professional years working on the passenger side of the industry, building long term partnerships, Drusch is keen to deliver that “respect” and desire to have a “mutually beneficial business” on the cargo operation at Qatar Airways.
“I think it gives me a much better perspective on what we can do, on what the passenger side has done that would help us, but also on what is different that we need to embrace and do better at,” he outlined.
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“It gives me a sort of bifocal vision, and then I’m able to bring it into one vision for us.”
With that mindset front and centre, he cited a conversation he had with a customer shortly after starting his role at Qatar Airways Cargo that sparked his desire to rethink BSAs: “One of our partners told me the agreement meant they lost money. I wish we had known that because I don’t want a partner to lose money.
“We could have talked about how we can adjust things, so that they don’t lose. I want to build that into our contract, so everybody has that security, that sense of a true partnership.”
