GSSA business to pick up as airlines outsource services
General Sales and Service Agents (GSSAs) would witness increased business during the coming months as more airline companies will opt to outsource their cargo services, said Ton Smulders, President of EGSAC.
More and more airline companies are opting to close down offices in certain unprofitable sectors – a crucial cost cutting exercise that has become mandatory due to the current economic condition, said Smulders.
"The airlines are also trying to cut costs and are considering closing down offices in certain countries. It is the GSSAs, which does all the work for them. While GSSA companies stand to benefit, airlines can avoid fixed costs, thereby limiting the expenditure and paying in proportion to the cargo movement," he said.
There are several cases of airlines choosing GSSA in an effort to cut down costs. Olympic airlines in Holland have chosen to go with the GSSA. Last month, Pakistan International Airlines appointed GSSAs in countries such as Denmark. It had appointed similar agents in the UK, Bangladesh, Hong Kong and Malaysia in 2009.
Speaking to Emirates Business over telephone from Amsterdam, following the announcement of a tie-up with a Sharjah-based firm, Smulders said the positive signs are emerging and the market is slowly picking up compared to the same period last year. "Basically, like every airline general sales agent, the market has been down last year. However, we see a very slight upward trend at the moment. We are finally seeing some light at the end of the tunnel," he said.
"We have had shipments in 2009, but they were much smaller. This had a direct result on the revenues within the industry. The revenue and commissions gained out of these shipments was also drastically less, compared to the previous year. The total market is down between 35 and 50 per cent compared to 2008," he said.
For EGSAC, 2009 despite the downturn was profitable, said Smulders. "Our turnover in 2008 was €6 million [Dh30m]. In 2009, it went down by 30 per cent. But the profits fell much further by 50 per cent. But we still were profitable," he said.
The market situation, he said, was improving at a slow pace. "The recession saw an upward trend in December, which historically is always a better period compared to January and February. But during the past two months, especially December and January, we have seen a slight increase in business compared to the same period last year. The increase may be just two per cent. But is still significant. I am hoping that the upward moment will continue," he added.
EGSAC last week appointed SNTTA Cargo as its exclusive member for Sharjah. SNTTA Cargo represents Emirates, Iraqi Airways, Kuwait Airways, Royal Jordanian, Singapore Airlines, Saudi Arabian Airlines and Sudan Airways.
In addition to the customary activities of a GSSA, SNTTA Cargo also provides aircraft chartering and ramp supervision services.
SNTTA Cargo's General Manager Mohin Jassal in his statement said: "Sharjah and Dubai attract large volumes of transit cargo for Africa and Europe, and have recorded strong growth over the past 15 years. This trend is expected to grow into the future. "Although the UAE is primarily an importing country, exports have shown tremendous growth in recent years mainly due to transit cargo, the traditional trading activities in the country and the increase in light industry in the free trade zones. As GSA for Iraqi Airways, we also look forward to realising the potential of the Iraq market, once it re-opens for scheduled carriers."
Smulders said the intention of the tip was the expand their base across the globe. "We are delighted to welcome SNTTA Cargo to the EGSAC family. This is a substantial operator with excellent credentials, and adds significantly to the professional coverage we can offer to carriers all over the world."
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