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The strength of a guarantee

The strength of a guarantee

By Hpanchal on February 28, 2012

Last year, Airmark celebrated its 10th anniversary by adding four new carrier customers. In 2012, Ipek hopes to add at least two more, an addition that will become an annual goal. This benchmark won’t be easy because of the pessimistic forecast for worldwide air cargo growth, but Ipek has hope that toward the middle of 2012, the storm clouds will lift. But it will take a long time for the economy in Europe to turn around; for that reason, he sees Airmark’s best opportunities for growth in Africa and the Middle East.

For the industry in general, Ipek predicts that GSAs will see increasing competition, a lack of financial support from banks, and airlines that are faced with cutting even more services and routes. One of the main problems, historically, has been that the airlines view GSAs as a separate part of their business, and he hopes to soon bring about a change in that perception.

“At some stage,” she says, “airlines should consider the GSA as part of their system and support us to survive to serve them better.”

There are still some regional hiccups when operating as a GSA. Victor van Eijk, managing partner of Cargo Wings, says that GSAs are much more established in Europe than in other parts of the world. These European groups function as pure GSAs, leaving forwarding duties to an third party. But in the Asia-Pacific region and in North America, that dynamic is a little different, which, he says, could create tension among industry players.

“In large parts of China and the U.S., a GSA may also have their own forwarding agency. This way other forwarders could believe to loose their contact to the GSA‘s forwarding side,” van Eijk says. “It is for that reason that the European GSA organizations do not have a forwarding department as such. Customers do not fear to lose customers to the GSA partner. They see the GSAs as a trusted partner in the vertical logistic chain.”

His advice is to separate the forwarding and GSA components completely; only then will U.S. GSAs gain the confidence to become market leaders, he says. Whether this will happen in 2012 is anyone’s guess; van Eijk sees the next year as being pretty much flat when compared to 2011 — not the most ideal environment for expansion or the re-imagining of business plans.

In the Asia-Pacific region and in the U.S., the GSA model is still developing, and one reason for the slow evolution, at least in the U.S., may be jobs. When a carrier outsources cargo sales to a GSA, the airline obviously has no use for the employees who once sold cargo as an indispensable part of the team. GSAs, Thominent says, try to pick up the pieces and add a few staff members from the airline onto their team — it makes sense, he says, to bring on employees who know the airline inside and out and can hit the ground running from day one. But job losses are sometimes unavoidable in areas without tough labor laws. In the UK, workers are shielded by the law.

“In Europe … if we take over a contract from an airline who had its own staff, the GSA is more or less obliged to take over as well the staff or to pay them compensation,” Thominent says, noting that the airline is required to do nothing when jobs are cut. “It becomes somehow the problem of the GSA either to re-employ the staff or pay them compensation, but not the airlines — which is not the case in the far east or the U.S.”

Stephen Dawkins of Air Logistics Group has seen a slow evolution of GSAs in the past 15 years. As carriers have looked to remove more costs from their own business, GSAs have flourished. Even in the last few months, Dawkins says he has been approached a few large, worldwide airlines who are looking for a good way to save money.

He predicts that with fuel prices only moving higher, he’ll soon be fielding more calls from carriers. For his part, he will continue to invest in IT, employees and efficiencies in order to be ready when the next carrier comes calling. But, he hastens to add, even as the GSA market grows exponentially, that doesn’t mean GSAs are an automatic choice for every airline.

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Comments

Submitted by Roy Bonus on

GSA agents are likely knowledgable, will follow-through and follow-up. Many work on shipment count, tonnage or dollar amount commission basis. They have to hustle for their contracted airline to make a living.

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