UL veteran questions logic of appointing GSAs haphazardly

By Rathindra Kuruwita 

Not a single established airlines, operate through a General Sales Agent (GSA) to Singapore, industry veteran Rajiva Prakash Jayaweera told the Presidential Commission of Inquiry (PCoI) on irregularities at SriLankan Airlines, SriLankan Catering and Mihin Lanka yesterday, commenting on a decision UL took to close their office in Singapore and operate through a GSA.

GSA is a sales representative for an airline in a specific country or region. The GSA receives commission to the tune of 3–5% on all tickets and unit of cargo space sold in the region that it represents. According to the UL’s 2009 manual overriding commission (ORC), a commission to an agent or broker on business sold by sub agents in his or her territory that SriLankan can pay for a GSA is 2.5% for passengers. However in GSA agreements signed with companies in Dubai, Seychelles, Thailand, Singapore and Pakistan, SriLankan had paid over 5%, the PCoI was told.

"It’s OK to use a GSA if you have fewer than four flights per week to a destination but once you start flying every day, it’s better to have your own office. This is because the costs incurred by the GSA do not increase by much when an airline increase flights to a destination. At most the GSA will have to recruit a new person but as flights increase the commission they get increases sharply," he said. 

SriLankan should not have entered into an agreement with a GSA if the cost of running a direct operation had been less than the commission given to a GSA, the commission was informed. "They should have done an audit one year after the agreement with the GSA. We fly 14 times a week to Singapore and there is no point operating through a GSA, in my opinion," Jayaweera said.

Jayaweera also said that establishing a corporate planning division which would take an integrated approach, rather than the divisional one, would also benefit UL. 

"We used to have one but Emirates shut it down and now we have a commercial planning division. The only problem with establishing a corporate planning division is that I don’t think we have anyone in Sri Lanka that can run it and bringing someone from outside might also create issues."

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