Chang­ing role of Gen­eral Sales Agents

As the con­cept of Gen­eral Sales Agents con­tin­ues to gain im­por­tance in the air­lines mar­ket, CARGOTALK takes a look at the strate­gies they have adopted to meet the re­quire­ments of the air­lines and stay ahead in the game. With chang­ing global times, they no

Cargo Talk - - Front Page - KAL­PANA LOHUMI

Gone are the days when Gen­eral Sales Agents (GSA) were ap­pointed only as sales and mar­ket­ing rep­re­sen­ta­tives for air­lines–re­spon­si­ble for sell­ing cargo space in the re­gions where the air­lines do not op­er­ate. Now air­lines are look­ing for or­gan­i­sa­tions to take over the re­spon­si­bil­ity–be it back of­fice, ac­cep­tance of cargo, book­ing, pro­cess­ing, load­ing or un­load­ing the air­craft.

GSA plays an im­por­tant role, es­pe­cially for an air­line that is en­ter­ing a new mar­ket. Air­lines look for a well es­tab­lished and well known GSA when en­ter­ing a par­tic­u­lar mar­ket. This saves the air­lines hefty charges in­curred on in­fra­struc­ture, hu­man re­sources and many other as­sets. Also by giv­ing the sales to GSA, air­lines are free from pay­ments is­sues or any other dis­putes that arise with the ship­per. Talk­ing about the growth of GSA busi­ness, Sahil Me­hta, CEO, Sovika Avi­a­tions says, “We have grown over the tra­di­tional model of GSA where we were per­ceived as an out­side agency which is per­form­ing only cargo ac­tiv­ity. Now, we have a model of profit shar­ing and joint part­ner­ship which also en­hances the growth of the par­tic­u­lar prod­uct.”

“The busi­ness is out­sourc­ing of cargo for an air­line. As GSA, we have the re­spon­si­bil­ity of sales and mar­ket­ing and some­times oper­a­tions as well on be­half of the air­line. An air­line would not like to open of­fices at ev­ery sin­gle point where they op­er­ate and here GSA plays a no­table role. It also be­comes eco­nom­i­cal from air­line point of view to not to have their own of­fice set up every­where,” says, Ra­jen­dra Dubey, Coun­try Man­ager, ECS Group.

“GSAs play a very vi­tal role in the growth and de­vel­op­ment of air cargo in­dus­try by be­ing an im­por­tant ver­te­bra in the back­bone for ‘air sup­ply chain’. A GSA not only pro­vides a cost ef­fec­tive, favourable and prof­itable busi­ness en­vi­ron­ment for new air­lines that are en­ter­ing into new mar­ket, but also con­trib­utes to­ward de­vel­op­ment of a coun­try’s econ­omy through ad­di­tional jobs and cargo ca­pac­ity cre­ation, much needed for the in­dus­try in­volved in fast mov­ing ex­port and im­port of goods by air,” in­forms Ajay Ku­mar Dutta, Gen­eral Man­ager, AVS Cargo Man­age­ment Ser­vices (GSA for Eti­had Cargo – In­dia).

Con­sid­er­ing the sce­nario of cargo mar­kets across the world, Gurmeet Singh, Re­gional Man­ager – Sales, Namaste Avi­a­tion, ex­plains, “The air­lines will al­ways con­tinue to look for in­no­va­tive ways to im­prove rev­enue and con­trol costs. The GSAs play an im­por­tant role in the air cargo in­dus­try and es­pe­cially for air­lines that de­cide to ven­ture into new mar­kets. When an air­line wants to start work­ing in a new and fast de­vel­op­ing mar­ket, con­duct­ing busi­ness through a GSA can in­crease the freight ro­ta­tion by great per­cent­ages de­pend­ing on the sea­son.”

He adds, “Be­ing na­tives, GSAs possess the mar­ket knowl­edge and main­tain con­tacts with lo­cal play­ers like for­warders and ship­pers as well. Such growth can be seen even in ma­ture mar­kets. Part­ner­ship with a re­puted GSA en­sures that the air­line is pro­vided with the nec­es­sary in­fra­struc­ture in terms of hu­man re­sources and other phys­i­cal as­sets, com­mu­ni­ca­tion tools which en­sure max­i­mum ser­vice and re­sults. The GSA also helps to main­tain and ben­e­fit from strong sales re­la­tion­ship with ma­jor for­warders.”

Com­ment­ing on the role of GSA in the air cargo in­dus­try, Puneet Sri­vas­tava, Re­gional Man­ager Cargo – North In­dia, Uzbek­istan, says, “GSA plays very vi­tal role in es­tab­lish­ing a prod­uct in the mar­ket, by in­creas­ing the sales and rev­enue of the air­lines and is also re­spon­si­ble for us­ing op­ti­mum space al­lo­ca­tion given. This helps the air­lines in po­si­tion­ing of prod­uct in the mar­ket, with min­i­mal re­sources.”

“Air­lines now want one sin­gle point of con­tact, some­one who is re­spon­si­ble such as a GSA to per- form the ac­tiv­i­ties of the cargo depart­ment. In a way, the air­line and a GSA both work in the growth ori­ented model with com­mit­ted rev­enues un­like the tra­di­tional method where the or­gan­i­sa­tions al­ways used to work in a fix per­cent­age model. Even from the in­vest­ment per­spec­tive, all the cap­i­tal in­vest­ment is be­ing done by GSA. It’s like hav­ing such a huge cargo struc­ture across the coun­try with­out in­vest­ing a sin­gle penny into this busi­ness and from day one air­line is look­ing at profit,” Me­hta adds.

What air­lines de­mand

“Air­lines look for a GSA with a sound po­si­tion in terms of mar­ket cov­er­age/hu­man re­sources. Young and dy­namic mar­ket­ing and op­er­a­tion team is al­ways im­por­tant with of­fices in sev­eral ter­ri­to­ries. Es­tab­lished GSA with a good mar­ket rep­u­ta­tion is the re­quire­ment,” in­forms Sri­vas­tava.

Ac­cord­ing to Dutta, “In to­day’s chang­ing times and cut-throat com­pe­ti­tion among air­lines, the se­lec­tion is fo­cused on a GSA dis­play­ing in­no­va­tion and new meth­ods to do the tra­di­tional busi­ness. Be­sides get­ting in­for­ma­tion on GSA’s strength and weak­nesses, of their in­dus­try ex­pe­ri­ence, cred­i­bil­ity, fi­nan­cial health, skilled sales, cus­tomer ser­vices teams to name a few, through a sam­ple ques­tion­naire, as one of the var­i­ous im­por­tant cri­te­ria kept for se­lec­tion for GSA.”

“The air­lines re­quire the GSAs to act as their eyes and ears in the as­signed ter­ri­tory. Air­lines look out for GSAs who can han­dle the non pro­duc­tive or back of­fice work such as data cap­ture, ac­count­ing, oper­a­tions and even ULD con­trol with a view of cost cut­ting mea­sures. Air­lines pre­fer to have ex­pe­ri­enced GSAs who can make the best use of the syn­er­gies that ex­ist be­tween them and dif­fer­ent car­rier net­works to pro­vide al­ter­na­tive ca­pac­i­ties to main­tain the mar­ket shares of prin­ci­pal air­lines even if they down­size their ca­pac­ity. There is a new trend emerg­ing where air­lines pre­fer to have GSAs who are ready to in­vest on be­half of their part­ner on blocked space agree­ments,” elu­ci­dates Singh.

“In our busi­ness, a highly pro­fes­sional team is re­quired to take care of all the ac­tiv­i­ties on be­half of air­line. The two ba­sic ad­van­tages for air­line of ap­point­ing GSA are cost and re­sults. The air­line can save a huge amount with the GSA in­fra­struc­ture and can get bet­ter re­sults also through their well es­tab­lished net­work. Air­lines can also de­mand more by pay­ing pre­mium charges for the same. Many times, we find the out­put is bet­ter when busi­ness is done the GSA way rather than when an air­line is do­ing it on it’s own,” opines Dubey.

“Air­lines are look­ing at part­ners who can work with them and ex­cel with them at the same pace. How­ever, the qual­ity mat­ters a lot. As a GSA, we are bound to go through

all the au­dits, qual­ity and safety re­quire­ments, which of course the prin­ci­pal air­line de­fines and those are the pa­ram­e­ters on which we work. As far as the role of GSA is con­cerned, per­tain­ing to mar­ket­ing of the cargo, the en­tire gamut of ac­tiv­i­ties is done by us; be it, how the cargo would come and where do we source this cargo from, to name a few,” says Me­hta.

“De­spite that it is an air­line’s in­di­vid­ual de­ci­sion of ei­ther ap­point­ing a GSA or do­ing ev­ery­thing by them­selves. What mat­ters is how an air­line wants to place its prod­uct in the mar­ket? And, what kind of growth it is ex­pect­ing from the cargo busi­ness? Due to the de­fined and com­mit­ted busi­ness air­lines that are ear­lier on a self mode has moved into a GSA mod­ule,” Me­hta adds.

Chal­lenges faced

Many times GSAs en­counter prob­lems due to gov­ern­ment reg­u­la­tory agen­cies, air­lines, ground han­dlers and freight for­warders that can af­fect the GSA’s busi­ness. Com­ment­ing on the chal­lenges faced by GSAs, Singh says, “The volatil­ity in the ex­change rates th­ese days also some­times af­fects neg­a­tively on GSA’s prof­itabil­ity. Gov­ern­ment can put in place some hedg­ing mech­a­nism to ab­sorb cur­rency rate fluc­tu­a­tion. Any lapse on the side of ground han­dling com­pany af­fects the GSA and in most of the cases the ground han­dling com­pa­nies are not un­der con­trol of the GSAs.”

“Any de­lay in un­der­stand­ing or over­look­ing the con­cerns of GSAs is bound to have a neg­a­tive ef­fect on over­all ser­vice de­liv­ery for the end cus­tomer. Many a times the air­lines also fal­ter on the ser­vice de­liv­ery and GSA pay­ments are with­held by the freight for­warders. In such sce­nar­ios, the ex­po­sure of the GSAs to fi­nan­cial losses be­comes greater. Lot of air­lines put a huge amount of ca­pac­ity into the mar­ket which has neg­a­tive im­pact on air­freight rates. Over­ca­pac­ity does push down rates which im­pacts GSA prof­its as GSAs make more profit only when the rates are higher,” he adds.

In Dutta’s opin­ion much time is spent in manda­tory doc­u­men­ta­tion and pro­cesses in­volved in reg­is­tra­tion of any new air­line when seek­ing nec­es­sary ap­provals from var­i­ous gov­ern­ment bod­ies. But, due to var- ious rep­re­sen­ta­tions by GSAs, air­lines and var­i­ous other bod­ies en­gaged in re­lated busi­ness much has al­ready been sim­pli­fied. It is the GSA, who is also re­spon­si­ble for any li­a­bil­ity aris­ing out of bounc­ing of cheques or non-pay­ment of dues by the agents. It is his re­spon­si­bil­ity to keep the cus­tomers as well all the IATA agents, his sub-deal­ers, happy by his friendly poli­cies, as he is rep­re­sent­ing an air­line. In or­der to main­tain the ex­pected stan­dard level of his agree­ment with air­lines as well as freight for­warders, it de­pends equally on ground han­dlers’ ef­fi­ciency to han­dle and trans­port goods in good con­di­tion for an on time de­liv­ery.

“Sole recog­ni­tion is a chal­lenge. In In­dia the GSA model is again looked in a very dif­fer­ent way. When we talk to the gov­ern­ment agen­cies, air­port op­er­a­tors, air­port han­dlers, the cargo ter­mi­nal op­er­a­tor, ev­ery­body per­ceives that we are an out­side agency who is per­form­ing this ac­tiv­ity of mar­ket­ing cargo for an air­line. So ba­si­cally the chal­lenge lies in get­ting space at the air­port. This might not be con­sid­ered as a chal­lenge but it still needs an in­volve­ment of the prin­ci­pal air­line and we have to again work in tan­dem with the air­line and the re­quire­ments which are fixed by the air­line,” notes Me­hta.

An­other is­sue plagu­ing GSAs is lack of good com­mu­ni­ca­tion be­tween air­lines and GSAs. Singh ex­plains, “It creates ob­sta­cles in day to day work­ing which re­sult in ma­jor is­sues down the line. Air­lines some­times do not re­main open to­wards their GSAs in terms of in­for­ma­tion shar­ing and in­puts on strate­gies as they think that GSAs should be re­spon­si­ble them­selves in their re­spec­tive ter­ri­tory of rep­re­sen­ta­tion.”

The tech way

In the cur­rent sce­nario, tech­nol­ogy plays a very im­por­tant role in making work easy and trans­par­ent. And, many GSAs are in­vest­ing on tech­nol­ogy to pro­vide best to their cus­tomers. Sri­vas­tava in­forms that by the joint ef­forts of ware­house han­dlers, air­lines, freight for­warders and ground han­dler’s things are chang­ing and will im­prove in the near fu­ture as the gov­ern­ment is also very keen to in­volve tech­nol­ogy every­where.

“As a GSA we have al­ready given that tech­ni­cal sup­port to our prin­ci­pal air­line. We work on an IT plat­form which en­hances the ca­pa­bil­ity of view­ing ev­ery sin­gle move­ment of the cargo, right from ac­cep­tance to the de­liv­ery,” re­marks Me­hta.

“This sys­tem is very user friendly and all the agents have their sep­a­rate lo­gins. This IT plat­form has helped to com­pletely elim­i­nate the man­ual copies of the AWB. It is an open book pol­icy. The air­line has an ac­cess to the sys­tem and they can watch ev­ery­thing that hap­pens to the cargo,” he adds.

All the stake­hold­ers of air cargo in­dus­try work on a com­mon IT plat­form. Dutta ex­plains that in­te­gra­tion re­moves du­pli­cacy and en­hances ef­fi­ciency. Time spent on co­or­di­na­tion with var­i­ous agen­cies for the same ship­ment can be dras­ti­cally re­duced. The GPS can be used in track and trace of cargo to con­trol mis­han­dlings of ship­ment.

“The air­line and GSA busi­ness IT tools are not de­vel­oped in the same way in all coun­tries. GSAs can now in­vest in new tech­nol­ogy sys­tems that are con­sis­tent across all lo­ca­tions which en­sure that peo­ple at dif­fer­ent lo­ca­tions are qual­i­fied in us­ing the same sys­tems in­fras­truc- ture and are there­fore best able to meet the needs of the cus­tomers,” in­forms Singh.

Air­lines expectations from GSAs are in­creas­ing day by day. They not only ex­pect to fill cargo space but also look for au­then­tic­ity and trans­parency. How­ever, GSAs need to ap­proach stream­lined tech­nol­ogy to make their busi­ness ef­fi­cient.

Ra­jen­dra Dubey Coun­try Man­ager ECS Group

Sahil Me­hta CEO Sovika Avi­a­tions

Ajay Ku­mar Dutta Gen­eral Man­ager AVS Cargo Man­age­ment Ser­vices

Puneet Sri­vas­tava Re­gional Man­ager Cargo – North In­dia Uzbek­istan

Gurmeet Singh Re­gional Man­ager – Sales Namaste Avi­a­tion

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