The GSA Dilemma- Are Airlines Hurting Themselves by Sticking to Legacy Practices?
Introduction: The Struggle to Adapt in a Changing Aviation Landscape
Airlines are under increasing pressure to maintain profitability, expand operations, and meet rising customer expectations. However, many airlines rely on General Sales Agents (GSAs) backed by legacy systems and outdated operational models. This reliance could be holding airlines back from unlocking their true potential in a rapidly evolving market.
Legacy GSAs, particularly those established decades ago, were designed for a pre-digital era. Many still operate within rigid frameworks that don’t align with today’s dynamic market demands, where agility, technological integration, and customer-centric strategies are paramount. Airlines face the challenge of whether to continue down the path of familiarity or embrace a new approach that treats GSAs as strategic partners instead of just outsourced sales representatives.
Understanding the Evolving Role of GSAs
General Sales Agents were once key drivers of airline revenue, facilitating ticket sales, managing customer service, and overseeing local market operations. Today, however, airlines need far more than just sales channels—they need partners capable of navigating digital platforms, facilitating seamless customer experiences, and helping airlines tap into new revenue streams.
A recent report from McKinsey & Company estimates that global airline revenues will recover to pre-pandemic levels by 2024, but only if airlines embrace new business models and strategic partnerships. GSAs can no longer afford to be reactive. They need to proactively support airlines’ long-term growth strategies, identify untapped markets, and offer insights that can drive customer loyalty.
The Importance of Corporate Sales Penetration and B2B Relationships
One key area where GSAs have traditionally excelled is managing corporate sales. However, in an era of changing business travel, GSAs need to evolve their approach to remain relevant. According to a 2022 study by Skift, 60% of corporate travellers now expect more flexibility in their travel plans, and 48% seek travel packages that include both leisure and business options.
This shift presents an opportunity for GSAs to reframe their approach to corporate travel penetration. Instead of merely selling tickets to corporate clients, GSAs can help airlines develop corporate travel packages that integrate exclusive perks, such as loyalty points, upgrades, and seamless connections to lifestyle memberships.
Collaborating with the Right Partners: GSAs as Connectors
GSAs must go beyond the conventional approach of selling flights to add value truly. In today’s connected world, strategic partnerships are critical to airline success. GSAs must identify partners that align with airlines’ brand values and growth goals. This could mean collaborating with luxury lifestyle brands, hospitality providers, or even fintech companies to offer bundled services.
A good example is the rise of travel apps that offer real-time updates, customized travel itineraries, and payment solutions, creating a seamless travel experience for passengers. Airlines partnering with fintech companies that provide travel rewards through credit cards or app-based bookings have seen significant revenue boosts.
A study from Phocuswrightfound that airlines collaborating with fintech companies reported a 25% increase in ancillary revenue through loyalty program integration.
GSAs can play a critical role by identifying these opportunities for airlines and facilitating partnerships that cater to both business travellers and leisure customers. By embracing collaboration, GSAs become more than sales agents—they become strategic extensions of the airline’s commercial team.
The Challenge of Aero-Political Complexities
Airlines expanding into new territories often face aero-political challenges, ranging from regulatory hurdles to bilateral agreements between countries. GSAs have traditionally managed these complexities, but a more sophisticated approach is required in today’s environment.
The CAPA Centre for Aviation report states that airlines expanding into new markets often need more time due to complex government negotiations and regulatory approvals. GSAs with deep regional expertise can help airlines navigate these issues more effectively, ensuring smoother market entry and reducing the time it takes to launch new routes.
Moreover, GSAs can assist airlines in lobbying for improved regulations, driving negotiations for more favourable bilateral agreements, and ensuring that the airline’s market expansion efforts are not hampered by regulatory red tape.
The Future of GSAs: A Strategic Evolution
As the aviation industry continues to evolve, the role of GSAs must be redefined. They can no longer afford to operate in a silo, focused solely on immediate sales targets. Airlines need GSAs to become holistic partners contributing to long-term growth, corporate sales penetration, and market expansion.
By leveraging data analytics, forming strategic partnerships, and offering solutions beyond ticket sales, GSAs can play a pivotal role in transforming the airline industry. Airlines that treat GSAs as an extension of their commercial teams rather than just external contractors will be in a stronger position to adapt to changing market conditions and meet the evolving needs of their passengers.
Conclusion: Airlines and GSAs Must Evolve Together
In conclusion, airlines that fail to evolve their GSA partnerships risk being left behind. The aviation market is increasingly competitive, and success will depend on the ability to forge deeper, more meaningful partnerships with GSAs. By shifting the focus from sales to strategic collaboration, airlines and GSAs can unlock new revenue streams, enhance the customer experience, and achieve sustainable growth in the long term.
Sources:
- McKinsey & Company, 2023, “Global Airline Industry Outlook.”
- Skift, 2022, “Corporate Travel Trends.”
- Phocuswright, 2023, “Travel and Fintech Integration: Driving Revenue Growth.”
- CAPA Centre for Aviation, 2022, “Aero-Political Challenges for Airlines Expanding into New Markets.”
Salil Nath