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
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.
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