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GSA


GSAs rule the roost as hard times force airlines to rethink


While the global economic downturn and related air cargo market slump hit airline general sales agents hard in terms of lower business volumes and increased pressure on often already-depressed rates, some have found a small silver lining to the big black cloud, reports Phil Hastings.


In an urgent push to further reduce costs, particularly fixed overheads such as staff and offices, many airlines have contracted out more of their cargo activities to general sales agents (GSAs) - or general sales and service agents (GSSAs) as a growing number of such companies now prefer to be known. Although that trend was


already well-established before recession struck, most industry sources agree it has been given added impetus by the recent downturn and a related reassessment by many airlines of the way they manage their cargo activities. “Airlines have been looking


for more outsourcing solutions when it comes to cargo activities like handling, ramp supervision and trucking in order to make savings,” confirmed Adrien Thominet, vice president sales and marketing for European Cargo Services (ECS) - one of the world’s largest GSSA groups with 42 subsidiaries in 30 countries, including Globe Air Cargo operations in the UK and Ireland. GSSAs have helped cover those requirements, “either where an airline had no staff to provide control or where it had some staff but because of recession was looking to cut costs,” he added. A similar picture was painted


by Steve Dawkins, the UK-based chief operating officer of Paris- headquartered Air Logistics Group, another of the world’s leading GSSA companies with 51 offices across 28 countries, including the UK and Ireland. “During the recession there was huge pressure on the airlines to reduce their costs and as a result of that I don’t think we have ever tendered on so much business as we did in the back end of 2008 and into 2009. New business has materialised from that – the first quarter of this year, for example, was very strong for securing business we quoted on in 2009.” Predictably, the global trends noted by Air Logistics Group and


ISSUE 3 2010


GSAs stress service aspect


The continuing worldwide trend for GSAs to expand the range of cargo services they offer their airline customers is clearly apparent in the activities of leading agents in the UK and Republic of Ireland. Indeed, GSSA (general sales and service agent) is now a more accurate tag for those companies. For example, AirSpace Aviation Solutions, the UK member of the EGSAC international air cargo general sales agent network, states that its intention is to provide customer airlines with “a range of professional airline and cargo management services, ranging from territory cargo sales to full cargo management”. Headquartered in Manchester and with other sales offices in London and Glasgow, plus a full sales and service facility in Dublin, the company’s UK home market carrier customer base includes Delta Air Lines, TAP Portugal, Air New Zealand, Aurigny UK, SriLankan Airlines, Jet2.com and Air Transat. In Ireland, it represents Delta Airlines and SAS (Scandinavian Airlines System). “Reducing costs has always been the most common reason


Nick Lawson


ECS have been equally apparent in both mainland Europe and the UK/Republic of Ireland, report some of the leading national GSSAs operating in those markets. “The majority of GSAs are now


looking at being GSSAs rather than being focussed solely on the sales aspect,” agreed Ton Smulders, managing director of Dutch agent Active Airline Representatives, whose most recent significant new business involved being appointed Netherlands GSSA for Saudi Airlines Cargo (other established major customers include Leisure Group/Arkefly, Russian airline Aeroflot and Greek carrier Olympic Air). “That is one of the things I mentioned to Saudia. We are not only there to do the sales for them but also to solve problems, arrange the trucking and oversee the trucking and the handling companies – and not just during the five working days but also at the weekends. It is not a 9 to 5 job.” Mike Staeck, group


managing director of German GSSA Transnautic Aero whose major home market customers include Aeroflot, made similar


observations and hinted that it was becoming increasingly important for an agent to offer airlines a wider range of cargo services just to retain business. “More and more airlines are


looking to use GSSAs, especially in markets where manpower is quite expensive, for example in Germany and more or less all over Central Europe – and I think you have the same in England,” he stated. “As a GSA or GSSA you have to provide a complete service. We offer sales, handling, accounts – whatever is required, we can do it. You cannot ask for additional money but you can keep your principal.” Nick Lawson, managing


director of UK GSSA AirSpace Aviation Solutions, said airlines and GSAs and GSSAs had all felt the effects of the recession; the substantial reduction in yields and margins was having a big impact. “The GSA option has never been more important to the airline industry, with its flexibility to adapt quickly to market conditions proving to be a powerful tool,” he suggested. Ian McCool, managing


director of leading Irish GSSA International Airline Marketing


(IAM), agreed that with many carriers having reported substantial falls in revenue over the last two years, all costs were being looked at. “This has naturally had benefits for many GSSAs and will continue to be the case for the foreseeable future. The use of a GSSA offers a carrier an immediate transfer to a sales and customer service resource without any fixed cost.” However, McCool went on


to warn that the general fall in air cargo yields over the last two years had also negatively affected GSSAs “as it becomes more difficult to make a profit on a contract if the GSSA is working on a freight-only commission basis”. AirSpace Aviation’s Lawson


admitted that the continuing pressure on air cargo market yields was putting GSA/GSSA and airline partnerships to the test. “As with any true partnership, the way forward must be mutually beneficial if the partnership is to stand the test of time,” he argued. “For example, many of the airline agreements now include the fuel surcharges in the base


why airlines consider using a GSA, with many carriers choosing to exchange fixed overheads for the more flexible options offered by the GSA,” stated Nick Lawson, AirSpace Aviation’s managing director. “Sales and service go hand in hand and the GSA is ideally positioned to manage all aspects of cargo activity such as handling, trucking, ULD (unit load device) control or interline co-ordination, providing the airline with a cost effective and efficient solution.” Further evidence of that industry trend is provided by the IAM (International Airline Marketing) group, the EGSAC


Ian McCool


member for Ireland and that country’s largest GSSA with responsibility for over 20% of all airfreight traffic from the island of Ireland and a customer portfolio including American Airlines, Air Canada, All Nippon Airways and South African Airways. The organisation now includes cargo trucking, handling and training divisions. In fact, according to Ian McCool, IAM’s managing director,


the trucking division, International Trucking Consolidators (ITC), is now the largest Irish-owned, air cargo trucking specialist, operating on all major air cargo lanes to and from that country. Meanwhile, training division Translogic, which specialises in aviation training courses, is said to be on target to have its busiest year since the company started in 2002. “GSSA business remains the group’s core activity but when


you are working in a small fragile market such as Ireland, it is nice to have the back up of the other businesses,” explained McCool. “We have always offered our principals and freight forwarding customers a one-stop shop incorporating export sales, marketing, customer services, import development, trucking services and handling operations. In a small market such as Ireland, the GSA naturally tends to fulfil all a carrier’s operational and customer service functions.”


figure for the GSA commission payments. In return the GSA is also investing in the airline’s future with training, technology and promotional activities.” Asked about the apparent


move towards GSAs receiving ‘flat rate’ payments from their carrier principals, rather than commission-based fees (see FedAGSA interview),


Lawson suggested that the basic commission structure still served the best interests of both the GSA and airline, providing an effective sales incentive. “One of the many benefits of using a GSA is the constant motivation to perform as the


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