Hello everyone, we have ushered in a new issue of aviation logistics lectures. In this issue, we will talk about the relationship between GSA, GSSA and airlines. I believe that everyone is also interested in this topic, and there may be misunderstandings about these concepts. So today we will discuss this issue. Don’t think that the second S is because I’m typing too much with my hands shaking, it really exists.
First of all, according to convention, let’s first explain the terminology. The so-called GSA is General Service Agent. And GSSA is General Service & Sales Agent. Well, as the name suggests, GSA is “service agent”, and GSSA is “service and sales agent”. They both have similarities and differences.
So what’s the difference between the two? Literally, it can be concluded that GSA does not have a sales function, and only provides services at the operational level. Only the GSSA can perform the sales function. This means that only GSSA can quote and apply for prices, while GSA is only responsible for services such as booking, arranging and making boards. Of course, in our actual work, it is not very clear. Many times what we call GSA also assumes the function of sales. This is why many friends may not have heard of the name GSSA.
So, since there are airlines, why come up with a GSA or GSSA? Because not every airline has such a budget to open a representative office in every place, it is a very expensive thing in itself. There are hard costs such as offices and equipment, as well as soft costs such as personnel and overhead. In addition, it is impossible for airlines to be very familiar with the gameplay of each local market, and rushing down by air will inevitably lead to high costs, and it is more likely to be unaccustomed to the environment. At this time, if someone who is familiar with the local market can open up the local market for the airline first, wouldn’t it be wonderful? Thus, GSA and GSSA came into being. In fact, GSA and GSSA represent the role of airlines in local sales and service. They represent the airline itself locally.
Therefore, GSA and GSSA basically receive instructions from airlines and execute them. Of course, they will have a certain degree of freedom in certain details. For example, whether to accept the goods from the agent A or the goods from the agent B, or the goods from the agent X or the goods from the agent Y. Generally, airlines don’t get involved too much in this kind of thing. As long as there is a reasonable reason for the execution process, it can be explained.
So in fact, they are already representing airlines locally. Of course, if you’re going to sign a contract, it’s usually you and the airline. If you sign with GSA or GSSA, it should be a service agreement. It is more to prove that there is an intermediary between you and the airline, and everyone agrees to conduct business activities with the airline through this intermediary. The parties who sign contracts like BSA and CPA can only be airlines and agents. You can check whether your contract is like this. Because GSA and GSSA do not have aircraft (aircraft), they do not have the authority to sign such documents.
In a similar situation, as well as the SPA mentioned before (click to jump to the original text immediately), the two parties who sign the SPA can only be the airline company and the airline company, and it cannot be a local sign, it is signed in the name of the headquarters. The reason is the same. Of course, the execution is the local person.
Different airlines have different regulations on how to charge the freight. Some are settled directly through CASS, not through GSA/GSSA, and some are paid to GSA/GSSA first and then transferred to the airline. This also involves factors of GSA/GSSA and airline settlement methods, but this is not the focus of this article. We will briefly explain this aspect later.
At the execution level, GSA/GSSA is responsible for all issues, including receipt, warehousing, board making, installation, follow-up and other services. Local agents also communicate directly with GSA/GSSA. In addition, there are some global companies that have contracts at the headquarters and the airline headquarters. They can directly use the contract at the headquarters to deliver the goods locally without signing the contract locally. Well, that’s the benefit of being bigger. The local agent lacks the support of the headquarters, but at the same time, it is more flexible, the ship is small and can turn around, and the response to the market is more sensitive and fast. It depends on how you look at it. OK, off topic.
Now let’s discuss the price issue. Many small partners will ask, if it is GSA/GSSA, how are their prices set? Generally speaking, no matter which airline it is, the price is determined by the market. If you want to apply for adhoc, you have to look at it separately. GSA/GSSA will have a certain degree of right to speak on the price, but whether the final price can be applied for is decided by the airline’s price department. This is the same process even if the airline’s own employees apply for it. There is no situation where the GSA/GSSA can set its own price. Therefore, if there is a relatively large adhoc application, whether it is GSA/GSSA or an airline employee, it must go to the headquarters price department to apply, and only after approval can it be approved.
As for the positions, the headquarters will not interfere too much. For the same reason, the headquarters does not know the local market situation, nor can it grasp the performance of each agent at any time. Therefore, when it comes to arranging positions, local people, whether it is GSA/GSSA or the airline’s own employees have more decision-making power than the headquarters. They can consider how to allocate positions based on the receipt of the flight, the combination of destinations, the delivery of the agent, and various other factors. Of course, there will also be a set of criteria when allocating positions. To put it simply, according to the priority of the goods, for example: BSA goods cannot be pulled, and for example: the priority of low prices and other standards.
At this time, I would like to remind everyone about the principles of position priority and application price (click to jump to the original text immediately). In these two aspects, the flexibility of GSA/GSSA processing is a little higher than that of airline personnel, and there are more ways to play. Airline personnel themselves are limited by company policies and norms and do not have much room for free control. And GSA/GSSA as long as the general direction does not violate the rules of the airline. Of course, whether this approach is good or bad is a matter of opinion.
GSA/GSSA has contracts with airlines. Like BSA contracts, they are generally based on “years”. If the performance of GSA/GSSA does not meet the airline’s standard, the airline may not renew the contract with it, or even consider canceling the contract in advance (of course, there will be liquidated damages). So to put it bluntly, the airline will allocate some powers to GSA/GSSA, and GSA/GSSA will exercise this part of the power locally on behalf of the airline. It is possible to do anything within the scope of authority and in line with the airline’s policy direction.
Next, let’s briefly talk about the GSA/GSSA and airline charging methods. Generally speaking, GSA/GSSA and airline settlement will have two methods, one is commission and the other is Mark-up. Commision means that, in addition to deducting necessary expenses, the revenue of a flight, or the revenue for a period of time, the airline needs to give GSA/GSSA a percentage of the amount as remuneration. The form of Mark-up is slightly different, that is, the airline company will set a fixed amount, and each flight or each period of time, GSA/GSSA needs to pay the airline company. Income other than that is GSA/GSSA income.
Both methods exist, but if you want to divide, the commission method is more common. Because if the mark-up method is adopted, the airline company has less control over the price of the destination, and it may not be able to cover all the destinations (or to put it another way, it is also possible to cover all the destinations, but the cost may be falsely high). Of course, GSA/GSSA will also consider this issue, so it will also comprehensively consider whether the fee is reasonable and within its range according to the airline network. Because this approach is equivalent to Dead-freight, and the airline is contracting the aircraft to the GSA/GSSA.
Well, that’s all for this issue. See you next time!