One of the biggest issues facing GSAs today is their ability to provide global solutions to their airline customers who are scrutinising every issue, including GSA services, in a worldwide context.
“Nowadays, airlines would look for global solutions rather than have a different GSA serving them in various countries
like five or 10 years ago,” says Julie Shek, Marketing Manager of Dyna-Trans (Hong Kong) Ltd, which is the GSA for Air Malta and Sichuan Airlines, and also for Air Hong Kong in the Hong Kong/Manila and Hong Kong/Peking sectors.
To meet the airlines’ global GSA challenge, a number of larger GSA companies have already expanded their own networks, or are in the process of doing so, while the smaller GSA companies without their own networks are trying to expand their coverage by making commercial agreements with other counterparts for co-operation and, also to work with them on a sub-contract basis.
“Although a number of carriers have their own offices and run their own operations, there is still demand for GSA services. This is because having a GSA can enable the carriers to swap the high fixed cost of their own operation for a uniform cost that relates directly to how much revenue the GSA generates,” Shek says.
An example of this is the recent move by AirBridgeCargo, the scheduled cargo airline subsidiary of Russia’s Volga Dnepr Group, to appoint Indo-Trans Logistics Aviation Services (ITL) as its GSA in Vietnam and Eurussia Air Cargo Inc in South Korea. ITL first opened for business in Ho Chi Minh City in 1999 when the air cargo market was still relatively small with just over a dozen foreign airlines flying in on a regular basis.
“But everything has changed and we are now on the top tier of Vietnam’s cargo GSA market which has recorded a very substantial growth of 21 per cent in 2007,” said a spokesman for ITL, which has come a long way since its first GSA appointment by Uzbekistan Airways whose services cover both Ho Chi Minh City and Hanoi.
“Not only do we aim to be the key market player in the Indochina region, hence, the name Indo-Trans being the short form for Indochina Transport, (but) we have now set our sights on the global market due to our exciting growth within just a few years.”
ITL now handles 61 flights weekly at both Tan Son Nhat and Hanoi’s Noi Bai international airports. The number is expected to rise as the country’s export volume is forecasted to grow by 30 per cent this year over 2007.
Cargo a major contributor
Stephen J Dawkins, Founder and Group Commercial Director of Air Logistics Group, says gone are the days when cargo was seen as an additional service provided by the airline.
“Cargo now provides a significant contribution to many airlines’ bottom lines. As such the airlines’ financial accountants expect to receive detailed and transparent business plans from their professional General Sales and Service Agent (GSSA) partners,” he says. ”As fuel continues to spiral upward, airlines are continually looking to reduce significant costs. Organisations like Air Logistics Group can provide these cost savings in a relatively short period of time.”
For example, on December 12, 2006, Air Logistics secured a significant national carrier flying to Europe daily with A330 and MD11 aircraft, to commence selling from 1 January this year. Within two weeks, Air Logistics had built a robust and aggressive business plan and secured key personnel to support the operation. By December 2007, Air Logistics generated combined gross revenue of US$26 million and in 2008, the company has budgeted to increase this by over 60 per cent to over US$40 million.
Dawkins says the modern GSSA’s role certainly encompasses more than selling. “The entire airline cargo operation can be handled and managed by the GSSA, which includes sales, marketing, operations, handling and trucking management, supervision, finance, administration and IT solutions. We are finding that airlines are recognising our expertise and knowledge, and together we can prepare joint budgets, then we will move forward and deliver the results.”
“To achieve this you need significant investment, a clear strategy, and the infrastructure to ensure you deliver,” Dawkins says.